Basics

Commonly Overlooked Business Expenses

If you’re self-employed or a freelancer, you know the importance of claiming all of your business expenses. In addition to lowering your tax payable and Canada Pension Plan amounts due, claiming relevant expenses also gives a more accurate snapshot of how well your business faired last year. Let’s review some lesser known allowable business expenses.

Vehicle Expenses

If you use your vehicle for business purposes, you have a number of related expenses available to claim. In addition to leasing payments, fuel, oil, and repairs, you may claim insurance, maintenance (such as oil changes and tire rotations), parking fees, and depreciation (CCA). If you chose to buy your vehicle rather than lease, interest included in your monthly payments is tax-deductible. Check your loan agreement or contact your lender to determine the proper figure to claim.

Don’t forget to include registration costs you’ve paid. Even the smallest expenses such as washer fluid and toll fees add up to lower you bottom line.

Staff Parties

If you’re one of those terrific bosses who holds a holiday party or summer barbeque for your employees and their families, the expense of the event is a tax deduction. Everything from the cost to rent a venue to the fees to hire a band is considered a business expense. These types of events are also exempt to the normal 50% rule for food and entertainment – the entire cost is deductible as long as the event is open to all employees.

Disability Related Modifications

Usually when improvements are made to a building, the expense is added to the value of the building itself and depreciated over time through CCA (Capital Cost Allowance). Disability related improvements are an exception to the rule. If you’ve modified your place of business to install disability related devices such as power door openers, wheelchair ramps, or even disability-specific computer hardware, you can deduct the expenses wholly in the year you paid them instead of depreciating them.

Cleaning Supplies

For many small businesses, cleaning supplies expenses are often overlooked at tax time. The cost of a few bottles of glass cleaner or paper towels may not seem to amount to much but remember that every dollar claimed as a business expense lowers your net business income figure. This figure is used to determine how much tax you owe as well as your portion of your CPP payable. If you are eligible for business-use-of-home deductions, don’t forget about those supplies used for cleaning your home office.

Bottom line – if an expense is related to earning business income, it likely qualifies as a business expense. Even the cost of tax prep software such as TurboTax Home and Business is a tax deduction. Step by step guidance, in-product support, and a tax write off? It’s a win-win!