Telephone:
If you use a residential telephone
line for business, you cannot
deduct the cost of monthly line
rental. Long distance phone
calls including GST, cellular
phones and pagers used strictly
for business are 100 percent
tax deductible.
Office
space: To claim office-in-home
costs, your office must be the
licensed address and head office
of the business. Keep files
on annual household costs, such
as mortgage interest, rent,
property taxes, hydro, insurance,
repairs and maintenance. Total
these expenses for the year
in each category.
Measure
the space used by the business
and the overall square footage
of the home. You can deduct
the business portion as a percentage
of overall costs. However, this
deduction can only be used to
reduce taxable business income
to zero and cannot create a
loss. It can be carried forward
and used in a year when the
business is making a profit.
Vehicle
expenses: If a vehicle is
used for both business and pleasure,
keep a mileage log with the
starting and ending mileage
for the year. Note each business
trip and the number of kilometres
traveled. The business portion
is calculated as a percentage
of the overall operating costs,
so record all gas, repair and
insurance expenses, plus lease
or loan interest payments. Depreciation
is calculated at year-end. The
personal portion of these expenses
should be treated as a draw.
Adjusting
GST: When all adjustments
are completed, including the
50 percent personal portion
of business meals, adjust your
GST account. If expenses have
been recorded as a full cost
to the business, then personal
portions deducted, calculate
the GST portion and deduct it
off the GST paid. Revenue Canada
takes great delight in auditing
these adjustments to ensure
that the GST is accurately accounted
for.
