5 Office Related Tax Write Offs for Canadian Small Businesses
When you start a small business, every penny counts. Here are 5 office related tax write offs for Canadian Small Businesses that will help reduce your income tax bill.
1. Office Rent Expenses
You can deduct rent incurred for property used in your business. For example, you can deduct rent for the land and building where your business is situated.
However, if you work from home, that rent expense has to be claimed as “business-use-of-home expenses“.
Keep in mind, you will have to prove your rent write off claims should the Canada Revenue Agency audit your business. Therefore, be sure to keep a copy of the lease agreement and any rent receipts.
2. Property Taxes
You can deduct property taxes you incurred for property used in your business. For example, you can deduct property taxes for the land and building where your business is situated.
As with rent expenses, the property tax related to business use of workspace in your home has to be claimed as business-use-of-home expenses.
3. Capital Cost Allowance
You may have a depreciable property in your office, be it furniture, a building, or an electronic that you use for business purposes.
The fact that these properties will wear out over time or even become obsolete is advantageous since you can claim a deduction on their costs over the years. The annual deduction is called capital cost allowance.
However, you cannot calculate the full cost of the property depreciable when calculating net business or professional income for the year you acquired the property.
4. Maintenance and Repairs
While you can deduct labour costs and materials for minor repairs done to your business property, it is impossible to deduct the following:
- Own labour value
- Costs incurred for repairs that are capital in nature, i.e., capital expense
- Repair costs that have been reimbursed by your insurance company
You are eligible for a capital cost allowance on repairs done on properties that are capital in nature.
For business use of workspace in your home, you should claim a repair and maintenance cost as a business-use-of-home expense.
5. Interest Deductible on Property No Longer Used for Business Purposes
According to Income Tax Folio S3-F6-C1, even if you have stopped using a property previously used for business purposes, you can deduct the property’s interest expense.
Independent of where you run your business from, you can significantly benefit from the expenses claim. Any cost of an ordinary and necessary business office item is likely deductible.
Do you have tax-related questions about your small business? Book a consultation with one of our tax planning experts and determine how you can maximize your tax savings for your business’ year-end.
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