Don’t forget these 2011 tax deductions
Reduce your tax burden by investigating these popular deductions. The Canada Revenue Agency (CRA) makes it fairly easy to understand the various deductions and tax rules affecting your business.
Of course, it’s always best to consult a tax specialist to obtain qualified advice on any tax-related issue. Don’t be afraid of the cost – I believe that a good tax specialist can save you more money in taxes than you’ll pay in professional fees.
Here are a few tax deductions to consider for 2011. For more information, visit CRA.
Hiring credit for small business
Self-employed people may be eligible for relief from the employer's share of employment insurance premiums paid in 2011. You may be eligible if you paid 2010 employer EI premiums of $10,000 or less and faced premium increases in 2011. If you qualify, you may receive a credit of up to $1,000.
Meals & Entertainment expenses
If you take a customer to lunch you can deduct the cost of their meal. CRA says the maximum amount you can claim for food, beverages, and entertainment expenses is 50% of either the amount you incur or an amount that is reasonable. Eligible entertainment expenses include activities your prospects and customers may really like such as tickets to concerts and sporting events.
Apprenticeship job creation tax credit
CRA says an eligible salary paid to an employee in a prescribed trade in the first two years of his or her apprenticeship contract may qualify for a non-refundable tax credit for the employer.
Want to learn some new skills, meet new contacts and do some travelling? You can deduct the cost of attending conventions – up to two per year.
According to CRA, an eligible convention must relate to your business or professional activity. You may have to subtract $50 per day for any food, beverages or entertainment you’ve enjoyed as part of your convention fee. But, you may be able to deduct that $50 as a general meal and entertainment expense anyway, subject to the usual 50% limit. Ask your tax preparer for more details.
Public Transit Tax Credit
In addition to any eligible automobile-related business travel expenses, don’t forget to claim your public transit fees. The money you spend to ride the bus, train or streetcar can add up. Speak to your tax specialist for more details.
When preparing for tax season, remember that you may deduct any reasonable expense you have paid or will have to pay to earn business income. However, you personally don’t have to make that determination – simply hang on to the receipt, record any helpful notes, and let your tax specialist assess deduction eligibility. After all, you’ve got other things to do.
• To pay your taxes online and on-time, find out more about Scotiabank’s Government Tax Payment & Filing Service.
This article was written for educational purposes only. For more information about eligible tax deductions and assistance preparing a tax return, it’s best to consult with a qualified tax specialist.
Got any tips to reduce 2011 taxes? Do you think you pay too much tax, or just enough? What upsets you about Canadian tax rules? Please add your comments below.
By Roger Pierce