Tax Tip Thursday

Home Office & Automobile Expenses

This week, the topic is a mix of Home Office & Automobile expenses. I’ll talk about both, with a bit of a focus section on corporations at the bottom.

Make sure you listen to the whole show using the player above!

Home Office

If you are self-employed and need to maintain a home office to do all your invoicing, bookkeeping, marketing, sales calls, etc… it is deductible.

These are a highly audited deduction and you need to make sure you have your paperwork and calculations in good order!

For your home office, we will need:

  • Size of your office
  • Size of your house
  • Amounts for your
    • Utilities
    • Alarm system
    • Maintenance and repairs – detailed listing (on your whole property)
    • Interest on mortgage
    • Property taxes
    • House Insurance
    • Maintenance services – lawn, driveway, etc.
  • If you use your garage or other outbuilding – provide square footage details and utility usage

Automobile

This is one of the biggest deductions and most poorly addressed deductions for small businesses in general. These are also a highly audited deduction and you need to make sure you have your paperwork and calculations in good order.

Sole Proprietorships, Partnerships, or Employment Expenses

If you are a sole proprietorship, partnership or have employment expenses, in order to receive the deduction, be CRA compliant and minimize the amount of tax you pay, you must provide the following:

  1. Bill of sale or lease agreement for your vehicle
  2. Loan documents if not on the bill of sale
  3. A copy of your previous year’s tax return
  4. The required expense amounts
  5. Mileage log
    1. Your beginning/ending of the year odometer reading
    2. All business mileage identifying the following information:
      1. Who you were meeting with
      2. What vehicle were you driving
      3. Where is the address of your meeting and your starting location? (Driving to and from your work office, not business travel)
      4. Why you were meeting with them? I.e., the purpose of the meeting
      5. When did you travel (date and time of meeting)
  6. Total of all your expenses associated with the vehicle broken down by category:
    1. Fuel
    2. Maintenance and repairs
    3. Insurance
    4. Licensing and registration
    5. Car washes
    6. Tires
    7. Parking

For Corporations

The requirements are somewhat less stringent for corporations. For those, in order to receive the deduction, be CRA-compliant, and minimize the taxes paid, you must only provide a mileage log showing:

  1. Who you were meeting with
  2. What vehicle you were driving
  3. The addresses of your meeting and starting location (driving to and from your office is not business travel)
  4. Why you met with them (purpose of the meeting)
  5. When you traveled (time and date of the meeting)

You can also do this the same was as the sole proprietorships do (listed above), but the corporation way is far easier!

This is Lots of Stuff

There really is a lot of work that goes into claiming these deductions from your taxes. And, like I said, both of these are highly audited, so you must be sure to do it correctly. The best way to make sure it’s done right the first time and to save as much money as possible on your taxes is to book an appointment with us today! We can get your 2023 taxes and deductions sorted out and get you going on the right path to have an easy 2024 tax year.

Disclaimer:

This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal or tax advice nor can it or should it be relied upon. All tax situations are specific to each individual. If you have specific tax questions you should book an appointment for a 1 on 1 consultation.