It’s the time of the year where you have to get all your paperwork ready to file your tax returns. Some people get stressed about it. But as long as you declare everything truthfully, you’re good to go. When you have a small business in Canada, you might be eligible for a range of tax deductions; as a result, you wouldn’t need to pay a lot for income tax. Generally speaking, when you have expenses to pay in your business, which helps generate revenue, it can be considered tax-deductible. One of the most important things that you should always try to save is the receipts of the expenses as it helps as proof if an audit is carried out. However, many business owners don’t know about these tax deductions. That’s why we have gathered the correct information and put it all here together for you. We are sure that you would get all the details you are looking for in this guide. But, you can always reach out to the accounting firm for your queries related to taxes. Continue reading to find out about the tax deductions which the CRA has approved.
Home Office expenses
Many people in Canada have their complete business setup at home. They can be entrepreneurs working in the e-commerce industry. E-commerce doesn’t really require a big office setup if it’s a startup. Home-based business owners are lucky because the Canada Revenue Agency (CRA) doesn’t mind if you deduct the expenses incurred for your office. However, particular conditions need to be fulfilled. You have to meet either of the two conditions.
- You spend 50% of your time at home working for the business.
- You conduct your daily management tasks at home, which includes conducting meetings.
When you are a small business owner, you most probably need a vehicle for different purposes. Most of the entrepreneurs say that vehicle expenses is one of the most common business expense. Some part of the vehicle expenses can be counted as a tax deduction according to the CRA. Some of the common expenses relating to the vehicle are:
- Toll charges
Ensure that you don’t lose the receipts for these expenses. It would act as a backup when claiming expenses.
All kinds of businesses typically have some personal expenses. It doesn’t matter what industry they belong to. These are some of the most common tax-deductible for your personal expenses.
- Home phone bill
- Home internet bill
- Cell phone bill
- Software Licenses
- Small Tools
It is crucial to keep in mind that you would only be able to claim these if they were directly related to your business. And, you’d have to prove it as well.
You have to be careful when filing your taxes returns because you wouldn’t want to pay more than the government requires. This guide would help you understand some of the common expenses eligible for tax deductions in Canada. Contact us now if you have any other queries related to tax deductions.