Don’t Miss Out On These Important Tax Deductions!
If you own a small or home-based business, you’re probably aware that there are certain tax deductions available that give you a financial advantage. You can use these options to help reduce your amount of taxable income. Often, small business owners overlook some of these deductions or don’t realize that they may be eligible. Here are some important tax write-offs to keep track of.
Home Office Expenses
If you run your business out of your home, a portion of your home is considered to be your work space. Work spaces, and all the financial expenses that go into them, may be eligible for tax deductions. The amount of deduction is equal to the percentage of your home that is used for business purposes.
These deductions can include:
- Mortgage or rental payments
- Utilities
- Property taxes
- Repairs and maintenance
- Insurance coverage
- Office supplies
Vehicles
If you use your vehicle for any business-related travel, you can receive tax deductions up to 30% based on a number of factors. These factors include:
- Mileage (you must keep a logbook of business versus personal use)
- Fuel
- Insurance
- Parking fees (fines not included)
- Maintenance
- Toll fees
- Vehicle registration expenses
- Lease payments (if you lease) or Capital Cost Allowance (if you own)
Professional Fees
If you hire a professional accountant or a lawyer to help you through normal day to day business operations, the service fees you pay can be tax deductible. For example, if you hire a contract lawyer or an immigration lawyer on behalf of a new employee, these fees may be tax deductible.
Advertising
Advertising expenses can be completely or partially written off depending on the type you use.
- Domestic radio and television advertising may be fully deductible – foreign broadcasting is not
- Full deductions can be received from advertising in Canadian newspapers and Canadian market-based magazines
- Ratio of advertising to journalistic content within the publication may affect the percentage of deduction available to you
Digital Services
If you have a website or advertise on a digital platform, some or all of the expense may be tax deductible. Website deductions may include the cost of creating your website, IT and programming services, website hosting, and domain name registration and renewal fees.
Entertainment
Taking clients our for lunch or dinner, having a party for your staff, or catering a fundraiser are just a few of the items that can result in tax deductions. Different types of events receive a varying percentage of deductions and you must be able to provide a receipt. For more info, you can visit the CRA website, or contact us.
Gifts
Non-financial Christmas bonuses, gifts and event raffle prizes can be tax-deductible. For example, if you provide each of your employees with a turkey for Christmas, the cost of the turkeys is eligible for deduction. So is that golf bag prize for the company tournament, and the baseball tickets for your number one client.
Insurance
Several different types of insurance are eligible for tax deductions.
- Business Liability Insurance
- Business Property Insurance
- Business Interruption Insurance
Capital Asset Depreciation
A percentage of any major equipment or property used for business purposes may be eligible for tax deductions. Each category is subject to a depreciation rate which you can claim as a tax write-off. The depreciation rates change from year to year, so ask your account to include these. The deductions can be as high as 55% for computer equipment t a slow as 4% for real estate property. Also included are vehicles, software, furniture, and other major business-related equipment.
Tax Deductions Add Up
With all the potential tax deductions available, missing out could mean you’re paying too much in taxes. Your accountant will know all the rules and percentages, as well as what is included and what isn’t. You will also be made aware of which deductions may or may not be available to you. Contact your accountant today to make sure you’re getting optimal deductions from your taxable income.
