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| Financial |
 Filing
Your DeductionsBy Debbie Patterson, owner of Odessey Business Services W hen preparing to file your taxes, in order to have this process run smoothly, economically and stress free, you should consider organizing your expenses and other paper work in a file fashion. For instance, have a tax file ready for your T-4’s, bank correspondence and RRSP receipts when they come in. Some other file categories to include are: Last year’s taxes and assessment: Include a copy of last year's tax return and the assessment you received after filing. This will have necessary information such as any carry forwards, your RRSP contribution limit available and installment payments if made. Moving Expenses: If you moved in order to find work, save all of your receipts, even if you paid a friend gas money to help you move. Medical Receipts: Include everything. Call your pharmacy if you are missing copies of your receipts, they will print off all your prescription transactions made throughout the year. If you paid into a medical plan from work, get a breakdown of the premiums paid, as these can also be used. Daycare: Babysitting, camp or daycare receipts are a great write off and are assigned to the lower income earner if you file as a couple. Medical and daycare receipts need to be included with the return, so make copies to keep for your files in case the return is ever questioned. Stocks: It is best to keep a detailed file with original purchase information for faster calculations of capital gains and losses. Promotion & Entertainment: Dining and entertainment expenses can be used to decrease income if they were for business use. Only 50% of ‘promo expenses’ can be used on the return. It is wise to note on the receipt who was present and what the event was for. There is a difference between ‘promo’ and ‘travel’, as 100% of travel expenses can be used on your return. If dining or lodging is for business conducted more than 40 km from your business base, this may be considered as a travel expense. Speak to your tax preparer for more details. It is also wise to note that the rules for golfing have become more stringent since the sport has become a widely used write-off. Green fees are not looked at as a valid expense, whereas the meals before and after the round may be considered ‘promo’ expenses. Home Expenses: Writing off home expenses for a home- based business is one of the last great tax breaks available. It is also an area that is closely audited as people try to take advantage of the situation. Home expenses are based on the percentage of the home used for business purposes. One situation where this may become complicated is in the case of a day-home operator. Detailed footage may be required to show the area of the home used for business purposes. Home expenses can be carried forward, so even if you feel you won't need them due to a loss situation, they can be used the following year. Vehicle Expenses: This is another area that can provide a great deduction to income earned from a home-based business but is also another area closely watched for abuse. Vehicle deductions are based on mileage used for business versus mileage used for personal. A vehicle log is well advised in case of dispute, since no receipts are readily available. The optional deduction for vehicle expenses is Capital Cost Allowance or depreciation on the value of the vehicle. Speak to your tax preparer to determine if CCA deductions are right for your situation. If you have a home-based business, you can either leave the GST as part of your expense, or you can take it out. Most tax preparers would prefer the GST be taken out of the expense. This is done by taking the total of the receipt and dividing it by 1.07 to get the original amount before GST. The difference is the GST amount. If you are calculating the GST from dining receipts, calculate the GST on the amount before tip and add the tip to the pre-GST amount. When looking for a professional to prepare your return, be sure that they are well aware of all of your circumstances so that they can prepare your return to your best benefit. Get referrals from people who have some of the same circumstances and ask for references. If you have any doubts about how your preparer is doing your tax preparation, don’t be afraid to say something…these are your taxes after all. Debbie Patterson is the owner operator of Odessey Business Services, specializing in income tax. Visit her website: www.odesseybusiness.com for more tax tips or contact her directly at 403.816.5098 |