Those who have kept a full annual logbook for at least one year since 2009 can even switch to using a three-month logbook, which can then be used to calculate business travel for the full year. The annual results simply need to be within 10% of the amount of travel recorded in the year that the annual logbook was kept.
income, and the salary needs to be reasonable considering the child’s age and what someone else would be paid to do the job. Records are also required. If paid in cash, the child will need to sign a receipt. Meanwhile, there is no opportunity to claim the value of board and lodging provided to a dependent child, spouse or common-law partner.
EMPLOYEE COSTS Employers can deduct their share of an employee’s CPP or QPP contributions, Employment Insurance premiums, provincial parental insurance plan premiums, and Workers’ Compensation amounts. They can also deduct premiums paid for sickness, accident, disability or income insurance plans. Contractors can even deduct the salary paid to a child or spouse, but there are restrictions. They need to pay the salary, the work has to be necessary for earning business or professional
LEASED OFFICE EQUIPMENT A business can lease computers, cell phones or other equipment, and deduct the percentage of the lease costs that relate to earning business income. The deductions also include the airtime for the cell phone that reasonably relates to earning business income. Any purchased equipment will need to be deducted as a Capital Cost Allowance, and the
interest paid on money borrowed to buy the equipment that relates to business income.
PROFESSIONAL MANAGEMENT & ADMINISTRATION FEES They are all considerations that can benefit from a professional accountant’s advice. The cost of that advice represents a deductible expense of its own. Acceptable deductions include fees paid for professional advice or services, the legal fees to keep records and, yes, the accounting fees used to prepare and file income tax and GST/HST returns. There are some exceptions. For example, the legal fees used to buy a capital property cannot be deducted, but will instead need to be added to the cost of the property. For complete information on these potential deductions, visit www.cra-arc.gc.ca.
In the next issue of
Contractor Advantage •F ireplaces & Woodstoves • Flooring Trends •G reen Basement Renovations • Interior Doors •W ood Moulding Design • Marketing Tools
CONTRACTOR ADVANTAGE
JULY/AUGUST 2012
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