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Are you self-employed? Don’t forget these tax deductions

Are you self-employed? Don’t forget these tax deductions
Self-employment has many perks. From being your own boss to choosing your own hours, it’s an attractive way of life. However, navigating your taxes can feel like an inescapable labyrinth. Fortunately, you receive an extra month-and-a-half to file your taxes with a deadline of June 15th. You should still pay your taxes by April 30th, however.

But that’s not all. The Income Tax Act (ITA) allows you to deduct a range of business expenses. You offset your net income by claiming these expenses, which in turn reduces the taxes you owe. For its part, the Canada Revenue Agency (CRA) can verify and determine whether these expenses were incurred for the purpose of earning your income.

For the self-employed, filing a tax return can be complex. However, you could be eligible for the following tax deductions.

Home office
This can be a complex deduction but if you are eligible, you can claim a portion of your home expenses. For example, insurance, property tax, mortgage interest, and utilities all fall under this category. Your home office space must meet one of the two requirements:
• It is your principal place of business; and
• You use the space only to earn your business income, and you use it on a regular and ongoing basis to meet your clients, customers, or patients.

Vehicle expenses
If you use your vehicle exclusively for business, deductibles can include:
• Gas
• Insurance
• Repair costs
• Parking fees
• Other related expenditures

Conversely, if your vehicle is also used for personal reasons, you can only claim on the percentage that is used for business. Therefore, it is extremely useful to keep a record of such payments.

Like any other business expense, your travel must have been for business purposes and you must prove that the travel was required for work. The following things can all be claimed:
• Airline tickets
• Hotels
• Rental cars
• Other related travel expenses

A quick pro tip - handing out a few business cards on the beach in the south of France unfortunately doesn’t count!

Did you know some work-related equipment is eligible too? We’re talking about things including:
• Phones
• Printers
• Computers

Regardless of whether you claim the home office deduction, you can still deduct your equipment expenses. Details of usage and an explanation of purchase are mandatory.

If you’re self-employed, it’s important to learn which tax deductions you qualify for. This way, you won’t miss logging deductions that could impact your tax return. Keeping an organized record of business receipts and expenses will spare you a headache during tax season.

If you have any business-related questions, give Sicotte Guilbault a call. We are more than happy to offer solutions and can assist you in growing your business.

by: Kevin Montpellier - Lawyer
posted on: December 16, 2019