Ask me to name one of the most frustrating things I see on a quarterly basis, and my answer would be: waste. Waste is a prominent problem, so may think that I’m talking about wasteful spending, but there’s another big way Canadians are leaving cash on the table—losing out on opportunities to claim more on their taxes.
Here’s a dilemma I face on a daily basis: when to open my mouth when I see someone wasting their time or money on an accounting process that does not reap them all the benefits it should. I want to scream, “What about all the missed deductions you’re not taking advantage of?!” It’s like watching someone race through a video game to get to the end without ever collecting any coins or bonus lives along the way. These deductions are there to help you and your small business. Sure, they may be hard to navigate or catch them all, but that’s why you need a professional accountant on your side.
I say, it’s time for small business owners to stake their claim, especially when they are using their home as a workspace. The first step, in my opinion, is always to get an accountant who is sensitive to the laws around home business claims. But as you prepare for any tax season, keep in mind some of the most common expenses home-based business fail to claim and remember the only way to maximize your deductibles is to keep those receipts!
If you carry any business insurance, including buildings, machinery, and equipment, pay attention. Deductible insurance includes malpractice insurance or other business insurance—vehicle, product liability, professional liability—you may purchase. For more on the kinds of insurance that can be claimed by Canadian companies, the Line 8690 page of the CRA website is helpful.
- Publications & Memberships
Any trade specific publications you receive on a monthly, quarterly or annual basis, can be considered deductions. Just make sure that they are unique to your business and can’t be general publications. Like those publications, if you belong to any professional organizations, you can deduct your membership fees and dues provided they qualify. Union fees and licensing boards count!
- Child care expenses
Are you the lower income spouse in a household that pays for child care costs? Then you can claim $11,000 for each child born in 2015 or earlier and $8,000 for each child born in 2009 or later. Those expenses include babysitter or nanny fees, daycare costs, and after school program (PLASP) fees.
And, did you know that 2016 is your last year to claim your Children’s Fitness Amount? That’s the tax credit of 15% you can get back from a physical activity program for the kids. You can claim up to $500 if your child is under 16 and their program qualifies for the children’s fitness tax credit (check the receipt).
- Car expenses
If you are required to use your personal car or buy tools to carry out your employment duties, you can deduct expenses related to your vehicle, if you’ve completed form T2200, Declaration of Conditions of Employment. Deduct only the business use portion of your car, which includes:
- Repairs and maintenance
- Lease costs (max of $800 + taxes)
- Capital cost allowance
- 407 charges
- Parking fees
Considering whether to lease or buy a car? If you think the difference tax reasons, see Toronto Accountant Discusses Leasing vs. Buying Car.
As a Canadian taxpayer, you can also claim the Public Transit Tax Credit, for amounts spent on monthly or yearly public transit passes. Eligible passes include: This will end as of July 1st 2017. So do be aware of this.
- Education and certifications
If you’re considering taking a course that is directly related to your present job—either at an accredited school or a place like Brainstation—and will expand on your skill set in the same industry, the tuition expenses are deductible. Do not deduct anything if you are taking something new to add to your business or to offer a different service.
- Safety clothing and uniforms
If your business includes outfitting yourself and your employees in uniforms or safety clothing, you can deduct the cost of all those items, plus the cost to have them cleaned. Unfortunately, this does not count the cost of dry-cleaning your day-to-day clothes—although that would be great, wouldn’t it?
- First-Time Donor’s Super Credit
Have you or your spouse not claimed a charitable donation tax credit for the last five years? Make a contribution to your favorite charity this year and claim a deduction of 40% of your gifts of $200 and under and 54% of donations over $200 (without exceeding the maximum of $1000). This super credit is applicable exclusively between the years of 2013-2017, so you’re right in the sweet spot right now. For more information visit the CRA website to see how the super credit works.
Of course, I don’t want you to forget to keep receipts for your office supplies, furniture, and tech items. Scan them and save them to a folder on your computer, or in the cloud, if you can.
If you have any questions about what you can or cannot claim, contact me. I’ll help you find all those deductions you didn’t even know you could claim.