During tax season, there are always some questions about what can and cannot be claimed. The best thing to do is contact a professional accountant to answer your questions – especially as a small business. CRA does not take “I didn’t know” as an excuse, and any glaring inconsistencies opens you up to investigation. So, don’t take the chance. Take the time you need to learn about your proper deductions, or have an accountant prepare your taxes.
If you own a small business, you are not really saving much by doing your own taxes. The Tax Act is very complicated, and deductions and deadlines have changed over COVID. If you took advantage of federal COVID relief programs, the situation could be even further complicated. Hiring an accounting firm that specializes in brick-and-mortar, e-commerce and hybrid businesses ensures you file on time and with the right information. Any mistakes you make on your own can be costly.
That being said, it is always fun to take a look at deductions people have tired to claim over the years!
You cannot claim leisure trips unless the intent was specifically for business or medical reasons. A man with a skin condition learned this the hard way. When his doctor told him a warmer climate could help his condition, he vacationed in a couple warm states. But since he didn’t receive any medical treatment while there, his claim as a medical expense was denied.
Despite the creative listing of “hearing aids,” no, you cannot claim headphones. Enjoy that Spotify subscription at your own cost.
Straight up insurance fraud
One businessperson thought they were being smart by hiring someone to burn down their failing business, then collect a high payout from insurance. Not only was this insurance fraud, but the hapless person made the situation so much worse by trying to write off the fee paid to the arsonist! Needless to say, this scam failed on all levels.
Tattoos and piercings… and breast implants
Sorry, but when these are done as personal body modifications, they cannot be claimed as medical expenses. Cool new skull tatt, though. On that same tangent, breast implants are not medical expenses that can be claimed under “when my wife got them it cured my depression.”
These are not business events. CRA sees weddings as strictly personal – and you should, too.
Fees resulting form illegal activity
Like our arson story above, others have tired to claim fees or costs from illegal activity. One person soon found out that having your hash seized at the border and having resulting legal fees cannot be written off as business losses. CRA has no interest in footing the bill for your foolish decisions.
We get it – we really do
The pandemic and economic flux across the nation, along with other factors, have seen some businesses get very creative with their solutions to stay afloat. While we applaud innovative solutions, ramping up e-commerce and using COVID funding to get your business through tough times, that should never extend to “creative” tax filing. Contact AF Accounting today. We know the deductions you are entitled to and can ensure you only pay your fair share, or that you get the maximum allowance on your return. We look forward to helping you.