Tax Tip Thursday

If you have children, there is a new Ontario Learners Support payment available of $200 for kids up to 12 and $250 for kids up to 21 with special needs!

I don’t know if it is going to be taxable or not at this point. I submitted a question to the Ontario Government and to the CRA, but it could take up to two weeks to come back. Regardless, it IS free money for people with kids!

I know I say it all the time, but you are literally saving yourself money in so many ways by being organized, especially (but not exclusively) for small businesses. I have pretty much set fees for preparation of small business, rental property, and corporate tax returns. Many people are organized and so that is the price they pay, year after year. But a lot of people do not or will not subscribe to being organized or using our processes or our templates! They send their information to us in dribs and drabs — five, ten, fifteen emails. As a result, we have no choice but to charge them bookkeeping fees on top of the tax preparation fees.

I am sure I am not the only accountant doing this, so please do yourself a favour and organize your files!

In the name of getting organized, go take your odometer reading if you haven’t already!

It is too important.

Most people don’t understand the importance of an odometer reading and mileage log if they are self employed or drive for their employers (or for their own corporation). Believe it or not, there are FIVE methods/options for claiming your car expenses, and if you don’t use the right one for the right circumstance, you could very well be faced with a very costly outcome, a CRA review, or even an audit.

And if you think it is worth it, the deduction for car expenses could be between $5,000 and $20,000 very easily! That could translate into anywhere from $1,500 to $10,000 in taxes. Personally, I would much rather be on the receiving end of that transaction than the giving end!

I don’t have space here to go through all the methods and options available, but I will share the Coles Notes. If you have car expenses to claim, though, please give us a call at our office! We’ll be happy to help.

You are allowed to deduct a portion of your expenses that you spend on your own personal vehicle that you utilize for business purposes. You are allowed to deduct the expenses according to the kilometers you drove the car for business as a percentage of the total amount of kilometers you drove the car for the year.

This applies if your Corporation owns the vehicle (i.e., the vehicle title is actually in the corporation’s name).

You are allowed to pay for and deduct all the expenses of the vehicle through your corporation, but be aware that if you use the vehicle for personal use at all there are significant taxable benefits charged back to whoever is using it.

In this case, you pay for all the expenses of the vehicle personally.

The corporation should provide you with a form that says you drive your vehicle for business and that you need to pay the expenses (T2200). You need this form to deduct the expenses!

You are allowed to deduct vehicular expenses proportional to the percentage of the total kilometers that you drove it for business.

Just like in 3A, you pay for all the expenses of the vehicle personally.

Instead of getting a T2200 and claiming the mileage on the vehicle, you can bill the corporation for your mileage. It is NOT taxable to you personally AND it is tax deductible for the corporation AND you even get an HST credit!

Just like in 3A and B, you pay for all the expenses of the vehicle personally.

Then, just like in 3B, you can bill the corporation for your mileage. It is NOT taxable to you personally AND it is tax deductible for the corporation AND you even get an HST credit!

Looking to claim vehicular expenses this year?

We’ll be happy to help you make sure you’re doing it the right way so that you don’t get any nasty surprises from the CRA. Contact us to learn more!

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.