write it off! maximize your tax deductions
DESCRIPTION
This presentation explores many of the business expenses you can claim if you're a commissioned employee, independent contractor, sole proprietor or corporation.TRANSCRIPT
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Write It Off!Write It Off!
Presents:
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What Is The Largest Single What Is The Largest Single
Expense In Your Life?Expense In Your Life?
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Tax!Tax!
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43.6%43.6%
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Tax EvasionTax Evasion
versus
Tax AvoidanceTax Avoidance
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Taxpayer Bill Of RightsTaxpayer Bill Of Rights
“You have the right to pay no more and no less tax than what is required by law”
- CRA, Publication RC4471
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The GameThe Game
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How Can I Make
This Expense Tax
Deductible?
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The Game becomes one of The Game becomes one of
Intellect and and
Creativity
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Get Smart!Get Smart!
Get Creative!Get Creative!
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Choose Yours CarefullyChoose Yours Carefully
The best tax professionals are
fantastic communicators And
highly creative problem solvers Not
simply technicians
Make sure these traits are present in the professional that you choose.
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The Usual Stuff!The Usual Stuff!
Advertising Salaries, Wages & Benefits
Business Taxes/Fees/DuesStart-Up Costs
Telephone & Utilities
Delivery Expenses Professional Fees
Insurance Rent
Office Supplies Loan / Line Of Credit Interest
Management & Administration Fees
Meals & Entertainment
Business Travel GasolineAutomotive MaintenanceInsurance407ETRDepreciation of vehicle Lease payments
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Write Off VacationsWrite Off Vacations• The cost of business travel may be fully
deducted, provided the business nature of the trip can be demonstrated.
• Hotel, airfare 100% deductible.• Meals are still 50% deductible. • My Doctor and Dentist clients always have
“continuing education” seminars in places like Bora-Bora and Tahiti. All are fully deductible .
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Write Off The Office PartiesWrite Off The Office Parties
• Six “Office Parties” are allowed per year. • You can spend up to $100 per employee and
deduct it 100%. • Reasonable costs spent on existing or
prospective clients can be 50% deducted. • Do some business at the party! • Product demo, sales pitch or educational talk
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Deduct Your KidsDeduct Your Kids
• I recommend the child must be at least 14
• A market (minimum) wage must be paid to the child
• A paper-trail must exist for the transaction (eg. cashed cheque).
• The child must do actual demonstrable work for the business.
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Make Your MortgageMake Your MortgageTax Deductible (partly)Tax Deductible (partly)
• Charge rent to your business or corporation
• Must be used more than 50% of the time
• Heat, Hydro, Water
• Mortgage Interest
• Home Insurance
• Maintenance Expenses
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Buy A Home Using Your Buy A Home Using Your Corporation’s MoneyCorporation’s Money
• Employee loan is tax free as long as you are purchasing a home for own use.
• Repayment must be clearly articulated. I recommend a loan document be drawn up.
• Repayment must be within a reasonable time.
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Buy New Equipment Buy New Equipment Towards End Of Tax YearTowards End Of Tax Year
• Depreciation (CCA) On Computers is 100% of it’s acquisition cost. This is treated as a direct business expense.
• Depreciation (CCA) on Automobiles is 30% of it’s acquisition cost. This is treated as a direct business expense.
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Income SplittingIncome Splitting
Corporation Versus Sole Proprietor
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Personal Versus Corporate Personal Versus Corporate Tax RatesTax Rates
• Personal Top Marginal Rate
• 48% combined federal and provincial
• Incorporated Company “Small Business Deduction” marginal rate
• 15.5% combined federal + provincial
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Income SplittingIncome Splitting
Employee With Employment Expenses
Sole Proprietorship
Incorporated Company
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Income SplittingIncome Splitting
Majority Of Expenses
Attributed To IndividualIndividual:
Employment Expenses
Sole Proprietorship
Majority Of Revenue Attributed To
Incorporated CompanyIncorporated Company
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When Should You IncorporateWhen Should You Incorporate
When revenues are robust enough to be in excess of tax losses, then it’s time to think about incorporating.
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Thank You! Thank You!