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Tax Savings for the Self-Employed

For those of us that take the leap into running our own business, there are areas where we tax plan to increase our deductions or minimize our taxes. Here are some helpful reminders to assist you in keeping more of your earnings in your pockets rather than in the pockets of the Canada Revenue Agency.

• The deadline for filing personal Canadian income tax returns is June 15 for self-employed individuals. If you have a balance owing and fail to pay by April 30^th, you will be charged interest as of that date. So you should ensure an estimate of your taxes is sent in by April 30^th to avoid interest charges.
• If you maintain your records in a home office, you are able to deduct a percentage of the household expenses based on the area used for the business. Furthermore, any increase in the value of the property is covered by your principal residence deduction, but only provided you make no structural changes to the property and do not deduct depreciation on the property for tax purposes.
• Personal assets used in a business can be rolled into the business on a tax deferred basis, however, once you cease to operate the business, the assets are transferred back to you and additional taxes may result. Talk to your tax advisor on ways to reduce any tax liabilities on ceasing your business.
• Automobile expenses are deductible for business purposes based on the actual distance driven for business. A log book must be provided upon request from the Canada Revenue Agency, otherwise, your deduction may be disallowed. A detailed log should be kept for all business use of the vehicle.
• Interest on personal loans can be considered deductible if the funds are used in the business. Talk to your tax advisor on how to re-structure your loans for business.
• Discuss these tax planning options with your tax advisor to ensure you maximize your tax deductions this year.