Remember your employer must issue your appropriate documentation such as T2200 (for Canadians), which states they expect you to make certain expenses in order to perform your job for them.
If you run a business, you can claim tax deductions for most costs that you incur when running your business. These tax deductions are then used to reduce your taxable income. It is important to note that when you are claiming items as tax deductions for your business, you will need to ensure you have complete and accurate records.
As a business owner, it’s also important to give your employees the right advice and they understand what they can and cannot claim as a work-related expense in their tax return.
What can be claimed as a work-related expense?
There will be times when you have paid for items, goods or services as a work-related expense, but it is also used for personal use. For example, you may use a mobile phone to complete your work on, but you use it outside office hours to send personal emails or make personal calls. In this case, you can only claim a deduction for the work-related portion. This may be calculated as a percentage of the overall costs.
Some of the most common expenses include:
For most cases, having an accurate record of the deductions you are claiming is a must. This could be travel records, kilometres driven or phone bills. So long as your expense is directly related to your occupation and is not paid for via other means and you have sufficient evidence of the cost, you may be able to claim it as a tax deduction.
What can be claimed as a work-related expense for your business?
When you’re running a business, there are often a lot of costs involved in keeping your doors open. That’s why it’s even more important to know what you can (and can’t) claim as a deduction.
In general, you can claim:
Operating expenses are usually those costs that are incurred whereby it is a legal obligation for you to pay for the goods or service. You don’t necessarily have to have an invoice for those expenses, but you will need to have a record of the expense.
What cannot be claimed as a deduction?
There are a number of items that aren’t tax-deductible. These include, but aren’t limited to:
If your earnings are classified as personal services income, your deductions could be limited, so it is best to check a professional when you’re in doubt.
Who can claim expenses?
All employees can claim work-related expenses in their tax return as long as they can prove these were a requirement to perform their job. This includes those who are employed on a casual basis.
Anything else I should know?
If you need assistance understanding more about work-related expenses, run[Accounting] can assist you. Give us a call today to discuss your business needs.