Attn: Canadian Business Owners (Sole Ownership)

[NathanBWF]

I have a small home based business. This will be my first year writing off business expenses and I was under the impression that I would get back whatever I spent on business related materials (i.e. office supplies, printers, etc.), however my accountant tells me today that I will probably only get back roughly 28% of what I've spent because of my tax bracket or something. Any other business owners know how this works (without getting too complicated) ?

 

[blakeatwork]

get him to show you the T2124 (Business Income Form).

You can claim any business expenses against the income, obviously. Any Business use of home expenses are only applied if the net income hasn't reached 0 by way of expenses.

Did you take it to a CGA or an H&R Block?

**EDIT** Also, you are responsible for your portion of CPP, as well as the business half, effectively doubling it on any net income shown

 

[NathanBWF]

Originally posted by: blakeatwork
get him to show you the T2124 (Business Income Form).

You can claim any business expenses against the income, obviously. Any Business use of home expenses are only applied if the net income hasn't reached 0 by way of expenses.

Did you take it to a CGA or an H&R Block?

**EDIT** Also, you are responsible for your portion of CPP, as well as the business half, effectively doubling it on any net income shown

We have someone that does taxes for our whole family. Works for Hurgott Duval or something.

Sorry, I'm still confused.

Example: Say I buy a computer desk for my home office that costs $100. He says I'm only getting $28 of that back, where as I thought I should be getting the full $100 back because of my tax bracket. Does that sound right to you...?

 

[blakeatwork]

Originally posted by: NathanBWF

Originally posted by: blakeatwork
get him to show you the T2124 (Business Income Form).

You can claim any business expenses against the income, obviously. Any Business use of home expenses are only applied if the net income hasn't reached 0 by way of expenses.

Did you take it to a CGA or an H&R Block?

**EDIT** Also, you are responsible for your portion of CPP, as well as the business half, effectively doubling it on any net income shown

We have someone that does taxes for our whole family. Works for Hurgott Duval or something.

Sorry, I'm still confused.

Example: Say I buy a computer desk for my home office that costs $100. He says I'm only getting $28 of that back, where as I thought I should be getting the full $100 back because of my tax bracket. Does that sound right to you...?

Ohhh... he's Capitalizing it... so you're only getting a portion of the deduction, spread out over a set period of years, based on on the CCA (Capital Cost Allowance) rates. See if he'll write it as a business expense, as the net amount of $100 might not be material when compared to your overall income. The only thing he's doing is saving some epxenses for you to claim in the next few years.

 

[NathanBWF]

Originally posted by: blakeatwork

Originally posted by: NathanBWF

Originally posted by: blakeatwork
get him to show you the T2124 (Business Income Form).

You can claim any business expenses against the income, obviously. Any Business use of home expenses are only applied if the net income hasn't reached 0 by way of expenses.

Did you take it to a CGA or an H&R Block?

**EDIT** Also, you are responsible for your portion of CPP, as well as the business half, effectively doubling it on any net income shown

We have someone that does taxes for our whole family. Works for Hurgott Duval or something.

Sorry, I'm still confused.

Example: Say I buy a computer desk for my home office that costs $100. He says I'm only getting $28 of that back, where as I thought I should be getting the full $100 back because of my tax bracket. Does that sound right to you...?

Ohhh... he's Capitalizing it... so you're only getting a portion of the deduction, spread out over a set period of years, based on on the CCA (Capital Cost Allowance) rates. See if he'll write it as a business expense, as the net amount of $100 might not be material when compared to your overall income. The only thing he's doing is saving some epxenses for you to claim in the next few years.

Is that what he's doing?!? I didn't want to capitalize anything because of this, and all of the things I've purchsed for business are items that don't need to be capitalized (I don't think anyway). So if I don't capitalize, do I get the full refund back...? I better email him back and straighten this out...

Do you know of a list of sorts which tells me what items need to be capitalized and which don't...?

 

[blakeatwork]

Originally posted by: NathanBWF

Originally posted by: blakeatwork

Originally posted by: NathanBWF

Originally posted by: blakeatwork
get him to show you the T2124 (Business Income Form).

You can claim any business expenses against the income, obviously. Any Business use of home expenses are only applied if the net income hasn't reached 0 by way of expenses.

Did you take it to a CGA or an H&R Block?

**EDIT** Also, you are responsible for your portion of CPP, as well as the business half, effectively doubling it on any net income shown

We have someone that does taxes for our whole family. Works for Hurgott Duval or something.

Sorry, I'm still confused.

Example: Say I buy a computer desk for my home office that costs $100. He says I'm only getting $28 of that back, where as I thought I should be getting the full $100 back because of my tax bracket. Does that sound right to you...?

Ohhh... he's Capitalizing it... so you're only getting a portion of the deduction, spread out over a set period of years, based on on the CCA (Capital Cost Allowance) rates. See if he'll write it as a business expense, as the net amount of $100 might not be material when compared to your overall income. The only thing he's doing is saving some epxenses for you to claim in the next few years.

Is that what he's doing?!? I didn't want to capitalize anything because of this, and all of the things I've purchsed for business are items that don't need to be capitalized (I don't think anyway). So if I don't capitalize, do I get the full refund back...? I better email him back and straighten this out...

Do you know of a list of sorts which tells me what items need to be capitalized and which don't...?

hehe, before you beat him with the keyboard tray... 😛

This site should help: link to .pdf

It'll give you an idea of what the rates are, what can and can't be claimed, and length of CCA rates.

General rule of thumb is to CCA anything that will last more then 1 year. ie Furniture, computers, software, vehicles etc. Anything consumable, or that wouldn't ahve a residual value after use, would be expensed in the year it's used.

Also, i would suggest taking a CRA sponsored SMB owner course, that will help you identify and understand basic financial questions, especially where it involves taxation.

 

[NathanBWF]

Thanks a bunch! I'll talk it over with the accountant and see what we can do.