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Discussion Starter #1
I’m going to get my taxes done next week and I’d appreciate some advice on small business tax deductions. I have a small home business that earned $900 last year for 15 hours of work. I’m wondering what kind of documentation I should be collecting. The home office is 12% of the square footage of my house.

Am I right in thinking I can deduct a percent of: interest payments on my mortgage, oil bill, electrical bill, telephone/internet? Anything else I should collecting for the tax guy? Is this even worth the effort for $900?

Thanks!
 

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For $900, I would just put it under other income for now. If you are paying to have your taxes done, then the charge for the T2125, plus home office expenses, will be more than what you would save by writing off the expenses.

Of course, if your business grows, then definitely go the business statement route.

Call up the T2125 on the CRA website to get an idea of what expenses can be claimed.
 

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Good advice from StarDancer.

The other issue I would wonder about, in your shoes, is the question of whether you maintained a workspace in the home (the source of the home-based deductions) throughout 2009. That is, if the work only took less than a few days, is it reasonable to deduct expenses that took place over the course of a year? This is kind of your judgment call; in your shoes though I personally would feel vulnerable in an audit.
 

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Discussion Starter #4
Yeah, I just did some quick math and based on the fact that this is only 15 hours of work, it doesn't look like it's worth collecting receipts.
 

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Discussion Starter #5
CRA says I can only claim the percent of time I used the space as an office. 15 hours out of the year is a fraction that negates the decuctions almost completely.
 

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For future reference, you could not claim ownership costs like mortgage interest. It would only be "operating costs", such as utilities. Study the CRA guides to see what can be included.
 

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I stand corrected. I was under the impression that if you deducted mortgage interest that you lost the capital gains exemption on the portion of the home used for business, but I seem to have been confusing that with CCA.
 
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