CRA only accepts original receipts, therefore, keep all online email receipts in a folder on your computer or stored data files for 7 years.
Buy everything on debit or credit card to keep a record. Record expenses from bank and CC every month.
If you receive payments or pay in cash, you do not have to record this. $20,000 cash or 15 transactions is max. limit on eBay as they report anything over that amount to CRA. Cash receipts CRA cannot prove this and loses 100% every time they try to catch you on this.
Gifts must be tangibles when you buy 5 or more. Does not have to be 5 of the same item nor bought at the same time but as soon as you have 5 or more you can then expense to promo at 100% rather than meals @ 50% deductible.
No limits to gift but reasonable to income received i.e. 20% of gross revenues
Any activity you watch or participate. If you buy 5 or more tickets then will be promo
Buy season tickets (5 tickets or more) or movie passes will be classified under promo
Any prepared food or drink served to you is restaurant. Catering in home for guests considered meals.
Single receipts in restaurant not acceptable and not worth expensing unless out of town or cannot get home within 3 hours of a business meeting, expensed under travel.
Except networking events or breakfasts, luncheons or dinners considered cover charge is promo
Referral fees, discounts on services, products
Licenses, Dues, Memberships, Subscriptions
Social club memberships not allowed but entertainment, cartering, green fees, locker fees and laundry etc. can be expensed
Membership related to your business or company is acceptable i.e. VAG membership if you are in the arts & culture industries.
Expense everything under $1,000 or limited life expectancy
Furniture, tools, equipment etc. bought prior to expensing or capitalizing can be expensed a full value if you have receipt. Without receipt then fair market value. Try to find the highest market value on internet or antique appraisals etc. and keep the record of this.
MLM monthly min. purchases, autoships can be written off as supply or marketing
*Brian Stewart case – He took his case to the Supreme Court of Canada and won when he proved that he was doing business with reasonable expectation of profits, therefore, CRA cannot deny his expenses even though more than income realized.
Capital Purchase has to have 2 legs: 1/ Over $1,000, AND 2/ have a life expectancy
Furniture and furnishings, equipment with receipt at full purchase cost even if 5 years old.
Car bought 5 years ago but now capitalizing can be set up for purchase price with receipt, otherwise, fair market value.
Legal, Accounting & Professional
Anything not child or divorce related can be expensed
All money related services including personal taxes (better to put on personal tax return?)
This category never gets audited or requests for info very rarely. In Dalton’s 14 years only gave 6 receipts.
Anything that doesnot have a T slip expensed under Professional services i.e. public speaking, professional training, guest speakers
Management and Administration Fees
Consultants and contractors
Receipts outside your place of work, residence i.e. travel in a car and can’t get home within 3 hours, then any meals enroute expensed under travel. Technically still 50% but since they are buried in Travel, they get deducted at 100% and never ‘caught’ by CRA
Buy gifts while travelling can be expensed.
Any clothes, equipment bought while travelling can be expensed if work related but not any bought beforehand for trip. Ie If clothing was damaged during a trip, and needed for the rest of the trip, it’s replacement is valid. She probably wouldn’t have many successful meetings if she arrived barefoot! As her clientele is high-end, it makes sense the replacement boots were expensive. Now, as a tax-guy, I can’t claim $1,100 shoes b/c my customers don’t care/sales won’t be affected. Yes, it’s a cruel world I live in Clothes bought to attend an elite/expensive/prestigious event are allowable IFF (if and only if) they were to replace clothes she brought. E.G. the airport baggage handlers drove over her suitcase, the bellboy at the hotel dropped her suitcase in the pool, perfume bottle exploded and ruined the clothes, etc., etc. If she went on the trip and bought the clothes b/c she thought what she brought was not ‘enough’, that’s a personal call and not valid.
Go out of city and spent nite considered travel even if only to Whistler but work related
If going to look at rental properties must be two or more not two units on property to be eligible for self-employed expenses
Telephone & Internet
Landline, cell phones – % deductible depending on number of calls personal and business.
Internet 100% business
Can never write off TV service and so keep bill separate from phone & internet
Portion of rental payments for home or apartment & Utilities
CRA rules % of space but “such as” number of rooms.
How many room in your place: bath, bedrm., kitchen, dinrm, livrm. = 5 but bath and kitchen would not normally be used for office, therefore, you have only 3 rooms that can be used for office and so you take 1/3 rather than 1/5 for home office use.
Maintenance & Repairs
4 expenses: foundation roof, electrical and plumbing
Sanding floors and window treatment can be mtce.
Travel Log: Date, Destination, Distance
Destination – do not have to be specific but general ie. Customer meeting, banking, supplies, networking/marketing. No law to put exact info.
No Travel Log, no defence but do % of business and personal
Maintenance is everything that goes with rust prevention and optimum running of car. e. car wash, detailing
Lease is beneficial when 60% of kilomenters driven and work related.
Taxi and towing expense – expensed except fines and penalties
Bank and financing charges, annual fees
Interest on CC, LOC, Loan is expensed at % of bus/pers but can become 100% business over time when the 50/50 ratio used as you pay personal portion first and eventually you only have business portion left.
Clothes or any dry cleaning 100% write off (clothes purchase not deductible unless uniform or special clothes for construction, painting etc.)
Health 3% over deductible
Child Care – deduct $500 max. i.e. enrollment in arts or physical classes
Nanny should have SIN#
Only registered charities, otherwise, expense to advertising, promo or sponsorship.