New Business Write-Offs for 2018

If you’re a small business in Canada, you can take advantage of some major benefits recently handed down by the federal government. Individual provinces also have some changes you should look into, but let’s look at the broad strokes first.

No matter what the size of your business, and even if you run your company out of your home, you should take advantage of the many things you can apply against your tax burden. Always remember to keep your receipts and document your expenses in a day-timer or a spreadsheet. This will give you some backup if you are ever faced with a CRA audit.

Here are some of the business write-offs you can claim for the 2017 tax year:

Business operating expenses

Business operating expenses is a broad category that has many sub-headings. Some of the areas you can claim as business operating expenses include:

Vehicle expenses

 Capital cost allowance (if you own your car)
 Fuel, repairs, and maintenance
 Lease payments
 Insurance
 Parking
 Toll charges
 Applicable vehicle registration fees

Your office

 The rent that you pay to your landlord is a deduction. You need to keep your rent receipts in case of an audit
 If you own your location or if you do business out of a house you own, you also qualify for deductions. These could include depreciation over time
 Mortgage, utilities, property taxes, and home insurance if you own your home and do business out of it

Your business equipment

 Computer and other office equipment
 Leased equipment and the insurance associated with it
 Owned equipment depreciation on purchases assets

Advertising

 Website, hosting, and domain name costs fall under advertising
 Any other online advertising such as AdWords, Facebook ads, Twitter ads, boosted posts, etc.
 Any other advertising and related costs (printing, recording, design, etc.)

Accounting and legal fees

 If you pay to have your taxes done, or if you have retained a lawyer for any business purpose, these expenses can be claimed, with some exceptions.

Insurance

 General business liability
 Business property insurance
 Life insurance
 Business interruption insurance

Capital assets

A capital asset is anything of tangible value that is intended to last for a long time. if you intend to purchase any of these items, it is always advisable to do so before the end of your tax year so you can take maximum advantage of depreciation credits. Capital assets of this nature can include:

 Office furniture and fixtures
 Computers
 Office equipment (fax machines, copiers, printers, drives, etc.)
 Software
 Vehicles
 Vending machines

New for the 2017 tax year

As always, the feds have plenty of new additions for you claim, which may or may not apply to your situation. These include:

Small business job credit

If you have been operating for a few years already, you may be eligible for a refund of EI premiums paid for the 2015 and 2016 tax years. This will amount to a reduction from the then rate of 1.88% to 1.6%, of which you can claim the difference.

Accelerated capital cost allowance

This applies to businesses who own machinery or equipment that is used by you to manufacture goods for sale or lease. Eligible machinery will have an allowance rate of 50% on a declining-balance basis for equipment purchased in 2015 or after.

Capital cost allowance (CCA)

This replaces the “eligible capital property” system for claiming property depreciation and raises the inclusion rate to 100% for all eligible business property purchased, which can serve to lower your taxable income.

Tax support for clean energy

Businesses can apply for and receive new CCAs for installing and maintaining electric vehicle charging stations.

Small businesses, home businesses, and freelancers

These tax tips apply to small business, and they also apply to those of you who are self-employed. This includes creatives such as musicians, writers, photographers, and freelancers from all disciplines.

If you have never tackled a business tax return yourself, and even if you feel comfortable in this realm, it is always advisable to seek the advice of a tax professional. Ask others in your field who they might recommend. It’s important to work with somebody who understands your line of work as well as your goals, someone who will work hard to make sure you’re getting a fair shake.

As always, keep your books organized. You never know when your diligence and perseverance will come in handy. Good luck with your 2017 taxes!