Tax Write Offs for Small Business in Canada Accountant Toronto
Tax Write Offs for Small Business in Canada by Accountant Toronto
What are the tax write-offs available to small business owners in Canada?
If you are a small business owner in Canada, its important to be aware of all possible tax writes offs for your business. Tax write offs will significantly reduce your business taxable income and taxes payable.
Home-Office Expenses Tax Write offs for Small Business in Canada
The most common of the tax write offs for small business owners in Canada are home-office expenses.
Home-office expenses include:
Mortgage interest
Utilities
Property taxes
Repairs & maintenance
Home insurance
You cannot write-off 100% of those expenses, but you can deduct a reasonable portion.
For example, if you have a home-office (such as a den, a basement, a bedroom or a confined space that you use exclusively for your work), then the percentage of your home office expenses that you can deduct is equal to the percentage that your home office space is of the total size of your home.
If your home-office space is 15% of the total square footage of your home, then you can deduct 15% of your home-office expenses. That can really add up and hopefully will result in a tax refund for you.
Before deducting home office expenses, you should consult with an Accountant in Toronto.
Car Expenses Tax Write offs for Small Business in Canada Accountant Toronto
Car expenses are a major tax write off for small businesses in Canada. Car expenses include:
Capital cost allowance (if you own)
Fuel & oil
Insurance
Lease payments (if you lease)
Parking
Repairs & maintenance
Toll charges
Vehicle registration fees
You cannot write off 100% of your car expenses, but you can deduct the business portion. For example, if you drove 20,000 kilometers in the year, and 50% of those kilometers were for business purposes, then you can deduct 50% of your car expenses.
In addition, if you own your vehicle then you can write off 30% of the cost of your vehicle each year, which is referred to as Capital Cost Allowance. For example, if your vehicle cost you ,000, then you could write off up to ,000 in the first year. Like other car expenses, capital cost allowance must be prorated for the business use portion of your car.
When purchasing your next car, you should consult with an Accountant in Toronto, to determine the tax benefits available to you.
Business Expenses Tax Write offs for Small Business in Canada
Most business expenses incurred by small businesses in Canada are tax deductible.
The Canadian Income Tax Act states hat any expense incurred for the purpose of earning income from business, as long as that expense is reasonable, is tax deductible. In other words, business related expenses that you incur (as long as theyre reasonable) are tax deductible.
What are some of the common types of business expenses that a small business owner can write-off? They include:
Advertising
Capital cost allowance (e.g. on equipment purchases and car)
Home office expenses
Internet
Inventory purchases
Lease payments
Meals & entertainments (50% only)
Rent
Salary and wages
Sub-contractors
Supplies
Telephone
Tools
Speak with an Accountant in Toronto to find out if youre missing any tax write offs for small business in Canada.
Capital Assets Tax Write offs for Small Business in Canada
Tax depreciation (i.e. capital cost allowance) is a big tax write-off for small business in Canada.
A capital asset is something of tangible value, which will last a long period of time (usually more than 1 year). Capital assets include furniture and fixtures, equipment, computers, etc. These assets cannot be written off in a single year. Instead, capital assets are written-off over a period of time based on the Canada Revenue Agencys specified depreciation rates, which are as follows:
Equipment 30% per year
Furniture & fixtures 20% per year
Software 50% per year
Computers 100%
Computers include laptops, desktops, notebooks, hardware and computer related equipment, such as scanners, printers and faxes. Computers and computer related equipment can be written-off entirely in a single year, as long as the purchase was made from January 27, 2009 to February 2011. If you are looking to purchase computer equipment, now is the time to do it because you can get a significant tax deduction.
