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As a small business in Canada, there are a large number of tax deductions that can be aimed at your small business spending, helping you minimize your tax burden and maximizer your business income.

Take advantage of tax deductions:

Tax deductions help you reduce your tax bill, and to take advantage of them fully, you must know that they are. Here are a few tax deductions small business owners in Canada can claim:

  • Vehicle expenses: Lease payment, insurance, toll charges, maintenance (oil), and gas.
  • Capital property: vehicles, computers, furniture, equipment, and computers
  • Operating expenses: rent, insurance, heating, office supplies, and electricity.
  • Media advertising costs: Canadian magazines, newspapers, in addition to Canadian market radio and T.V.
  • Business management expenses: annual license fees, business taxes, membership dues for professional organizations, online marketing fees, mail and delivery costs, and professional consulting services.

Income-Splitting:

Hiring your family for your business is an opportunity to take advantage of income splitting. Family member employees must be doing actual work supported by documentation and paperwork relating to their employment. In general, the benefits of hiring family members outweighs any bookkeeping headaches, where claiming their wages as a business expense and splitting your net income with them could potentially drop you into a lower tax bracket.

Get Tax Credits:

The Canadian government has made available a host of tax credits aimed at specific sectors of the economy. Your small business could claim Investment Tax Credits (ITCs), here are a few:

  • Scientific Research and Experimental Development (15% of all qualifying expenditures)
  • Mineral Exploration Tax Credit (15% of qualifying expenses)
  • Apprenticeship Job Creation Tax Credit (up to $2,000 per year and equal to 10% of the salary paid to an eligible apprentice for the first two years)
  • Investment Tax Credit for Child Care Spaces (25% of the cost of creating spaces with a maximum credit of $10,000 per space created)
  • Atlantic Investment Tax Credit (10% of the value of purchase price of new buildings, machinery, and equipment used in farming, fishing, logging, manufacturing, and processing).

Meet Deadlines:

Avoid stress, trouble, fines, and the CRA, file your taxes on time. For small businesses, your taxes are not due until June 15, and any amount owed must be paid by April 30th.

Maintain Complete and Accurate Records:

Regardless if you’re profitable or you awe taxes, keeping records and receipts are necessary when your taxes are filled. These records help prove your deductions are legitimate.

Tax Tips