You need to file tax returns on time if you run a business to avoid any penalties from the CRA. Filing a business tax return and preparing for it effectively needs tax planning from a business. You may hire a reputable CPA (Chartered Professional Accountant) to file your tax return beneficially. Even after acquiring the best expertise to file a tax return, some tax filers don’t benefit completely. You will keep finding new things about tax returns with time as tax laws keep on changing. You can also save your money as a tax filer if you know how to. Here are 8 ways you can save money, filing your tax return as a business owner:
- Do You Purchase Gluten-Free Products? You can take advantage of your purchases of gluten-free food items if you have celiac disease. You may claim the incremental costs, linked with your purchases. You can calculate the incremental cost as follows: Gluten-free Food Item Cost – Cost of Similar Item (Not Gluten-Free).
- Medical Marijuana: If you purchase medical marijuana from a licensed producer, you can capitalize on it. You can list it as your medical expense as per CRA.
- Make the Most Out of Charitable Donations: You can reduce your tax burdens with charitable donations. Usually, business owners don’t know they cannot claim all charitable donations. They cannot claim a donation they make to an organization, not registered with the CRA. Additionally, such an organization will not offer an official donation receipt. Ensure you have an official donation receipt with a tax return to claim for it and reduce your tax burdens.
- Maternity Leave and Employment Insurance (EI): Typically, the Canadian government doesn’t deduct the full tax you are liable for when on maternity leave. Similarly, it will do the same if you are eligible to receive EI. The government will assume that EI is your only income in a year. It is a good strategy to set aside at least 5 percent of those payments to meet your tax obligations.
- Self-Employment Advantages: If you are self-employed, you should take advantage of it. Other business owners cannot take advantage of tax deductions that self-employed people can. For instance, you can deduct your home-office rent or a portion of the cost of utilities as a self-employed person.
- Students’ Parents: Eligible students with unused tuition or education credits may transfer up to $5,000 in unused tuition or education/textbook credits to parents. Or, students may carry forward the amount to claim for it in the future years. Parents can claim their credits on a business tax return provided that students file it first.
- Medical Insurance: Canadians purchase travel medical insurance while out of the country but don’t realize they can claim it. You can also claim it as a medical expense on your tax return.
- Transit: Monthly transit passes or annual passes for travel are tax credits. You can claim such passes with your tax returns as out-of-pocket expenses.
Filing tax returns on time will benefit you in two ways. First, you will avoid tax penalties from the CRA. Secondly, you will get back your money with eligible claims when filing your tax returns. Businesses should plan ahead of the tax deadline to file their tax returns and make eligible claims successfully.
Filing a business tax return is your responsibility as a business owner in Canada. Nonetheless, you can save your money and overcome your tax burdens if you take advantage of the following:
- You can claim incremental cost, linked with gluten-free items’ purchases if you have celiac disease.
- Plus, you can claim medical marijuana licensed purchase as a medical expense.
- You may take advantage of charitable contributions that you make to organizations, registered with CRA.
- You can capitalize on maternity leave or EI as a tax filer.
- Likewise, you can overcome your tax burdens as a self-employed person.
- You may take advantage of eligible students’ parents as a tax filer.
- You can capitalize on medical insurance as a traveller.
- Additionally, you can also claim transit expenses on your tax returns.
You may plan for tax filing before the tax deadline to make the most out of your tax returns in Canada.
Sohail Afzal is a CMA (Certified Management Accountant) and the Founding Partner of a professional accounting firm, GTA Accounting. He understands the needs of small-scale businesses & corporations and offers them tax advice to overcome their tax burdens. He is a professional author who often writes articles related to accounting.
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