What can I write off on my taxes?

What can I write off?

Tax time is often an enigma of write-offs, but what can you write off? The truth is, almost anything that relates to your business. Things that you may not think to claim:

Business Use of Home (office) - each item is calculated as a percentage of square feet used for business in the home.

Example: I have a 1000 sq ft home. My office is 100 sq ft. I will take 100/1000 = 10%. This percentage is what I will apply to every expense that my house contains.

Common things to claim with regards to the home office:
•      Hydro
•      Heat
•      Electricity
•      Phone
•      Rent
•      Mortgage INTEREST
•      Supplies
•      Equipment (computer, desk, etc)

Things to write off are not limited to the office. You can claim your vehicle as well! Again, it will be a percentage based on mileage this time. Example: You traveled 100 m for business, and your odometer reads that you traveled 200 m. Your percentage would be calculated as 100/200= 50%. Use this percentage of all related expenses.

Examples of vehicle expenses to claim:
•      Fuel
•      Oil
•      Interest
•      Insurance
•      License and Registration
•      Repairs & Maintenance
•      Lease payments
•      Parking

Don’t forget to take advantage of your depreciation/amortization/CCA (Capital Cost Allowance). This is the added write off that is available to you for almost anything of a value greater than $100. You can depreciate your vehicle, digital camera, desk, computer, etc. Just assign the item the purchase value, use the assigned depreciation percentage to the appropriate class of item (vehicle is typically 10 or 10.1 in Canada and depreciates at 30% per year).

You have a choice of methods of depreciation. Typically, it is either Straight-Line or Double Declining Balance methods. Straight Line is based on the estimated useful life of the object and depreciation is divided evenly amongst those years. Double Declining Balance removes a fixed percentage each year and can lengthen the number of years that you claim depreciation.

An example calculation for a car worth $100 using both methods:

Straight Line Method (useful life is 5 years):

Year      Purchase Price /UCC         CCA         UCC
1            100                              20            80
2             80                               20            60
3             60                               20            40
4             40                               20            20
5             20                               20            0

Double Declining Method

Year      Purchase price /UCC      Percentage (class)      CCA      UCC
1            100                              30%                        30      70
2             70                               30%                        21      49
3             49                               30%                        15      34
4             34                               30%                        10      24
5             24                               30%                         7       17

This article explained but a mere few items that can be written off and how to calculate the depreciation of capital items (items whose price is greater than $100).  Ensure that you keep accurate records to support your claims. A mileage logbook may need to be produced to prove the use of the vehicle in question. Make sure that you have the receipts, logbooks, and records for the case of audit.

I am a tax professional, and this article is representative of the prevailing regulations in Canada at the time this article was published.  While I am a professional, you are not my client, and so this should not be considered professional advice. Remember, though, that these rules can vary widely by jurisdiction, and that from year to year tax rules can change.  Therefore, you should always research whether or not you are eligible for these or other deductions/credits.  When in doubt, consult a local tax professional.