Tax This! What You Can & Can’t Claim On Your Tax Return

Pets:

A dentist wanted to claim costs associated with his office aquarium because the goldfish were a source of amusement for his patients. Not so – says the CRA. An animal can only be claimed as a deduction if they are specifically used for assistance with a specified medical condition. When it comes to deductions there’s no end to the list of items Canadian tax payers think they can claim. Unless you want to be re-assessed by the Canada Revenue Agency (and nobody really wants that) – make sure you’re aware of what can and can’t be deducted.

Medical Expenses:

Medical expenses can be tricky so make sure you keep all your receipts. You can stay organized throughout the year with TAXplan’s handy medical expense organizer. You can claim travel for medical expenses but only if equivalent medical services are not available nearby, and you need to travel at least 40 kilometers one-way to seek medical attention. Not sure what you can claim? We’re here to help.

Work Related Expenses:

If you have incurred expenses to do your job throughout the year, such as purchasing a new uniform, tools or even vehicle then you may be eligible to claim employment expenses. Keep in mind you will need your employer to provide you with a Declaration of Conditions of Employment or T2200 Form

Employment expenses include car maintenance and fuel, home office costs, mileage.  They do not generally include hair cuts and manicures unless you’re a professional actor or model. Keep your employment expenses properly organized with TAXplan.

Your Vehicle:

When it comes to your vehicle you can claim expenses as either employment or self-employment expenses, however, that doesn’t include speeding tickets incurred while trying to get to client meetings. If you used your own vehicle during the year to run your own business or to perform authorized tasks for your employer, make sure to keep your receipts as well as track your mileage. A mileage log is indispensable in situations where you might be re-assessed by the CRA.

It’s Not Always a Write-Off – Even if you’re self-employed:

If you’re working for yourself, you know how hard it is to make a living. And sure enough you want to keep as much of the money you earn as possible. Unfortunately, just because you’re self-employed doesn’t mean you can write-off every everything you spend your money on as a business expense.  The CRA will allow reasonable business expenses – keyword here being “reasonable”. For example, if you have a home office and claim internet and home phone as expenses, the CRA will expect that you are also using these items for personal reasons. Claiming 100% of these home expenses as business expenses will raise a red flag with the Canada Revenue Agency and may cause you to be reassessed. To be safe, always keep track of your expenses in an expense log and back everything up with receipts.

Your Home is Your Castle – not a Deduction:

There is a common misconception that the interest you pay on your mortgage for your principal residence is a deduction.  The truth is that only if your home is also your place of business are you allowed to claim a percentage of your mortgage interest as a business expense. If you’re not self-employed and do not have a “home office” the tax benefit of owning a home only comes into effect when you sell. Every Canadian receives a capital gains exception on the sale of their principal residence.

And finally….

Stay on the right side of the CRA with TAXplan – where you’ll never miss a credit or deduction. Our TAXplan TAXprofile is designed to provide you with a customized checklist of tax documents we will need from you in order to properly prepare your tax return and making it easier to get your maximum refund – guaranteed.

Still have questions about what you can claim? A TAXplan TAXpro can walk you through other credits and deductions that might affect you.

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