Visit often for the latest news and updates added to the top of each section

Small businesses

• Self-employed individuals who have reported a loss on their tax returns (which have not been offset with any other income), can carry back this non-capital loss to any of the 3 prior tax years
• When meal and entertainment expenses are incurred to provide a party or event to which all employees from a particular location are invited, 100% of meals and entertainment are deductible (limit of 6 of these events per year).
• Self-employed individuals may also, within limits, deduct personal medical expenses from business income, under a private health-services plan (PHSP), provided they are actively engaged in the business and derive more than 50% of their income from it.
• In most cases, as a self-employed person you report business income by using the accrual method of accounting.  You report income in the fiscal period you earn it, regardless of when you receive the income; and deduct expenses in the fiscal period you incur them, whether you paid them in that period or not.
• The federal budget in 2009 proposed a temporary 100% CCA rate for eligible computers and accompanying systems software acquired between January 28, 2009 and January 31, 2011, inclusive. Furthermore, the half-year restriction rule for the first year does not apply in this instance, so qualifying assets can be entirely expensed within one year.  The Ontario government has matched those changes, with the same effective dates.
• To get the full benefit of your claim for each vehicle, keep a record of the total kilometres you drive and the kilometres you drive to earn business income.  For each business trip, keep a log listing the date, destination, purpose and number of kilometres you drive. Record the odometer reading of each vehicle at the start and end of the fiscal period.
• As a general rule, you must keep records and supporting documents, which are required to determine your tax obligations and entitlements, for a minimum of six years after the end of the last tax year to which they relate.
• Most organizations have three forms of business structures from which to choose: proprietorship, partnership and  corporation. The business structure you choose will determine the taxes that you pay as well as your legal liability.

The above information is believed to be accurate and reliable as of the date it is written. Tax rules are changed frequently. Professional advice should always be sought before implementing any of the above information. Simplified Financials does not accept any liability for the consequences that may result from acting based on the contents hereof.