As a student, you’ve already enjoyed some tax breaks from tuition, education and textbook expenses. Beyond those, taking a summer job gives you a leg up on costs for next year’s expenses. And if you use your knowledge of tax credits, deductions and refunds, you might reduce the amount of tax you must pay on the income.
Expenses incurred while searching for a job aren’t directly deductible in Canada. You might be able to claim a few after you land a job, however.
If your new job requires that you move, you may be able to claim associated costs. The move must bring you closer to your future place of employment, and it must be more than 40 kilometres from your previous residence (the one from which you file your tax returns). The 40-kilometre rule applies even if it’s your parents’ home. If you use your school residence as your main address, then that’s where the measure starts.
Some moving expenses you can claim include:
- Vehicle expenses for travel to your new home
- Meals and accommodations on your way there
- Up to 15 days of temporary living expenses while you transition to your new location
- Incidental costs related to moving, such as fees for changing your address on documents and hook-up charges for utilities
You can use either the detailed or simplified method to claim moving expenses, but no matter which method you choose, keep receipts to support the amounts and to confirm that you did indeed move in order to work at your summer job.
Entrepreneurship can also generate tax deductions: If you go into business for yourself during the summer, you can claim the costs of equipping, supporting and developing your enterprise, as any small business owner can. If you start a dog grooming and walking business, for example, you might decide to design and print flyers and business cards to solicit clients. Under Canada Revenue Agency rules, these are legitimate expenses, and you can deduct them from your revenue as costs of doing business. The CRA lets you deduct current, reasonable amounts for a wide range of expenses, including:
- Business start-up costs
- Use of your home for business purposes, such as a home office or workshop
- Business licenses, fees or industry association memberships
- Costs of entertaining clients, such as paying for a lunch meeting
- Office supplies
- Business use of your car
You can’t always claim all the money you spend. You can only deduct 50 percent of meals and entertainment expenses, and you must pro-rate the deduction for your home office based on how much space you use and how much time you use it for business versus personal purposes. As with moving expenses, it’s critical to keep those receipts.
Scott Shpak is Editor-in-Chief, feature writer and photographer for Your Magazines Canada. He is also an operations and technical projects manager in the photofinishing industry, an experienced audio engineer and musician.