Last updated: Jan. 11, 2017
New Year Tax Savings Tips
The start of a new year means two things for small business owners in Canada:
- It’s time to think about your 2016 taxes
- It’s also a good time to think about different ways to minimize your tax burden in 2017.
Even if you have someone else prepare your taxes, it’s a good idea to pay attention to what’s going on with both your personal and business taxes.
Even though no one really likes to pay taxes, and would prefer to pay less, they often don’t take advantage of every tax break, loophole, or deduction.
Below is a list of tax saving tips that can help save your small business money and increase your bottom line.
Home Office
If your home office is the principal place where you conduct business, you may be able to claim a portion of your housing costs, including rent, mortgage, property taxes, utilities, telephone, and home insurance.
Capital Assets
Capital assets are assets that are used for your business and can be written off gradually by claiming the capital cost allowance each year (CCA).
Capital assets can include furniture, equipment, or an automobile. Capital assets wear out, become obsolete, and depreciate over time.
Through the CCA, small business owners can deduct the depreciation cost of capital assets over a period of several years.
Business Expenses
While capital expenses depreciate over several years, when it comes to most business expenses, including office supplies, stamps, parking fees, and delivery fees, they are 100% deductible.
Office expenses do not include filing cabinets, chairs, or desks as these fall under capital assets.
Business expenses like client lunches, gratuities, even tickets for a sporting event, so long as they are a legitimate business purpose, can be claimed on your taxes, but the maximum amount is 50%.
Medical and Dental Expenses
A lot of individuals are not aware that they can claim medical and dental expenses; and it can cover a wide range, from medications, to surgical treatments, to physical therapy.
When it comes to dental, you can claim anything not covered by insurance, including filings, dentures, and implants. You cannot deduct procedures that are purely cosmetic, such as teeth whitening. Like all business expenses, it’s important to save your receipts.
For self-employed individuals they must claim their medical expenses in a separate area on their tax return and cannot claim it through their business. A corporation as part of their employee benefit package can subscribe to employee medical insurance and health spending plans to cover medical costs.
RRSP Contributions
Registered Retirement Savings Plans (RRSPs) are one of the few deductions not tied to the December 31 deadline. RRSP contributions made in the first 60 days of 2017 can be claimed on your 2016 tax return.
FBC, Helping Small Businesses Minimize Their Tax Burden
When making decisions on deductions and when to claim them, you need a full understanding of all your finances and new tax laws. That can be a tall order.
Before you claim any eligible deductions, like capital costs or business expenses, it’s a good idea to consult with a tax expert that specializes in small business tax issues.
Whether it’s which deductions you can claim, tax preparation planning, bookkeeping, or financial planning, FBC is Canada’s Farm and Small Business Tax Specialist.
To ensure our new Members are on the right track, FBC provides a review of your previous 3 years’ tax returns.
For more information on how an FBC tax consultant can help your farm or small business prepare and file your annual income taxes, call us today at 1-800-265-1002 or submit an online form and an FBC tax specialist will contact you at your earliest convenience.