There’s a Taxman in my Wallet!
There are a variety of expenses and amounts that are deductible for taxes purposes, some strange and some that you may not know about.
Fun fact: Did you know, while polygamy is not legal in Canada, it is legal for tax purposes to treat more than one person as a common law partner? Although it depends on a number of circumstances, the tax benefits of doing so are numerous; including claiming their income (if it was less than $10,382) on your federal tax return as a common-law partner credit!
This is one aspect that constitutes of the wide array of deductible expenses but what about non-deductible expenses? The following are the most common non-deductible amounts that, although common, are eligible to be reassessed and denied by your accountant:
- Fines and Penalties
If you are charged with most fines or penalties, yes, inclusive of parking tickets and speeding tickets, they are non-deductible. However, there are some fines and penalties that don’t follow this rule and they are generally dictated under private contracts.
- Illegal payments
Any sort of payment that constitutes as an offense under the guidelines of the Criminal Code or Public Officials Act cannot be deductible.
- Capital expenditures
You cannot deduct the full cost of an eligible capital expenditure, as it is considered capital cost and an asset which gives you a lasting economic benefit. You are allowed to deduct part of the total cost over several years for tax purposes.
- Personal or living expense
Costs incurred to earn income for your business may be deductible; however, personal costs are personal in nature thus, are not deductible. Such costs include clothing and home mortgage principle payments.
- Meals and Entertainment
Disregarding a few exceptions noted in the federal tax laws, meals and entertainment may be eligible for a deduction of 50%.
- Recreational facilities and club dues
Such activities entail personal leisure costs. These costs can be either to maintain a yacht or golf course or even membership fees for golfing (unless and until you are in this business and this is the main source of earning income).
As with all situations, the deductibility of expenses and costs may vary depending on your circumstances. If you have more questions about your personal situation, don’t hesitate to contact us today. We will be glad to help!