6 Basic Tax Write Offs in Canada for Small Business
As a small business owner, you want to take advantage of as many basic tax write offs in Canada as possible. Here is some low-hanging fruit that you should make sure you’re claiming come tax time.
1. Telephone and Utilities
The use of phones and the internet is an expense. If phone usage is crucial in your business, you can claim the use of your phone as a tax deduction.
However, if you use the phone for personal and official reasons, you can only be eligible for a specific tax deduction percentage.
For instance, if you spend 30 percent of your time on the phone for business reasons, you could legally deduct 30 percent of your phone bill.
2. Office Supplies
Office supplies include traditional office items like pens, papers, printers, ink cartridges, staplers, janitorial and cleaning supplies, invoices and sales receipts, and beverages for the employee break room.
You can write off taxes on such office supplies as long as you use them for business purposes within their year of purchase.
Additionally, you are eligible to deduct work-related shipping and postage expenses. Be sure to file all receipts for office supply purchases for documentation purposes.
3. Office Operating Expenses
Office expenses are expenses used for the operations of the office. They’re often called “office operating expenses.”
Office expenses include:
- Software including web-based software
- Electronics such as computers, iPads, tablets, laptops, and desktops
- Website and website maintenance services
Some high-cost office expenses become business equipment. They’re categorized as assets and depreciate over time, thus, taken as expenses.
4. Legal, Accounting, and Other Professional Fees
These costs include consulting fees paid to external advisors. You are eligible for a deduction on accounting and legal fees that you incur to get assistance in keeping your records.
Professional fees are business expenses that can be written-off. If you incurred professional costs while preparing and filing your income tax and returns, you are eligible for a deduction.
Accounting and legal fees you’ve paid for an appeal against an assessment for corporate tax purposes are deductible expenses.
5. Freight and Delivery Express
Any cost related to freight and delivery express incurred in your business’s financial year is deductible expenses.
6. Employee Salaries, Benefits & Vacation Fees
You can write off business expenses such as salaries, benefits, and vacation fees for your employees.
Here are the requirements for writing off employees’ salary and benefit expenses:
- The employee is not an LLC member, sole proprietor, or partner in the business
- The salary is reasonable
- If services delegated to the employee were provided
Tax write-offs in Canada will ultimately help you reduce taxable income and tax payable and save you money.
Do you have tax-related questions about your small business? Book a consultation with one of our tax planning experts and find out how you can maximize your tax savings for your business’ year-end.