Frequently Asked Questions

If you have a question please email us at gbuck@gregbuck.ca and we will answer you as soon as possible.

The Care Free Cottage - by Dr. Manfred Purtzky CA

Can you tell me more about the B.C. Government announced Climate Action Dividend?

Can I claim part of my home expenses?

What portion of my vehicle expenses can I write off?

What portion of my meals can I claim?

Do I need to open a business bank account?

Do I need to register for GST?

What type of records do I need to keep?

What are the tax advantages fo having a home-based business?

What is a business?

Generally, income from business is distinguished income from property by the level of activity involved in earning the income. In the past, courts have considered a business to exist only if there is a reasonable expectation of profit. Now, as a result of certain court cases, Canada Revenue Agency (‘CRA’) will generally allow the “pursuit of profit” test where they find a personal or hobby element to the activity. The determination is whether or not the activity was undertaken in a commercial manner.

Frequently Asked Questions:

Q. Can I claim part of my home expenses?

A. If your home is your principal place of business or the place where you meet clients, customers or patients and conduct work, you can deduct from income a portion of your rent or mortgage interest, property tax, home insurance, utility bill and maintenance costs. The proportion of the deductions is calculated based on the amount of space in the home dedicated to business use. The deductible home expenses cannot exceed your income for the year (ie you cannot create or increase a loss with home expenses).

Q. What portion of my vehicle expenses can I write off?

A. Your deductible portion of automobile expenses must be determined by use of a mileage log in which you indicate the total kilometers driven by you and the total kilometers driven for business. Document business trips with dates, destination, purpose and kilometers. Then also record your beginning and ending odometer reading for the year. This percentage is then used to determine the portion of your total automobile expenses incurred (eg fuel, insurance, repairs and maintenance, leasing costs, amortization of capital cost, parking, interest to finance vehicle)

Q. What portion of my meals can I claim?

A. Only business meals can be claimed and are 50% deductible. You should always write the name of the person you are dining with on the receipt.

Q. Do I need to open a business bank account?

A. Yes, it is advisable to keep all your business income and expenses separate.

Q. Do I need to register for GST?

A. You must register for GST once your total annual sales reach $30,000 and your income is considered taxable for GST purposes.

Q. What type of records do I need to keep?

A. Keep all your supporting documents including your bank statements, sales invoices, purchases invoices and all other records and cash receipts.

Q. What are the tax advantages fo having a home-based business?

A. The tax advantages to having a home-based or other small business are firstly, that you can write off certain personal expenses that you would not otherwise be entitled to (eg home expenses, vehicle expenses). Also, if you are in a higher tax bracket, and the business is generating losses, these losses can be written off against your other income and could potentially put you in a lower tax bracket. (See table below for federal and provincial tax rates)

Federal tax rates for 2009:

· 15% on the first $37,885 of taxable income, +

· 22% on the next $37,884 of taxable income (on the portion of taxable income between $37,885 and $75,769),+

· 26% on the next $47,415 of taxable income (on the portion of taxable income between $75,769 and $123,184),

Provincial tax rates for 2008:

· 5.24% on the first $35,016 of taxable income, +

· 7.98% on the next $35,017, +

· 10.5% on the next $10,373, +

· 12.29% on the next $17, 230 ,+

· 14.7% on the amount over $97,636