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If you are self employed and work out of your home and move to a new home more than 40 kilometres away, a recent Tax Court decision means that you may be able to deduct your moving expenses for Canadian income tax purposes in the same way as an employee who moves to take a new job or an employment transfer.

: Reasonable expenses for meals and entertainment incurred for the purpose of earning business income are deductible

Reasonable expenses for meals and entertainment incurred for the purpose of earning business income are deductible for Canadian income tax purposes. However, only 50 per cent of these costs are allowed as a deduction for tax purposes. The costs of restaurant gift certificates used for promotion are also subject to this limitation.

Disclaimer:

"This article provides information of a general nature only. It is only current at the posting date. It is not updated and it may no longer be current. It does not provide legal advice nor can it or should it be relied upon. All tax situations are specific to their facts and will differ from the situations in the articles. If you have specific legal questions you should consult a lawyer."

Frequently Asked Questions

You can claim some entertainment costs as a business expense. It can only be “an amount that is reasonable in the circumstances.” How that is interpreted varies. You cannot rely on being able to deduct the full amount. Typically, 50% is the maximum, but not always. There are also some surprising exclusions. For example, club dues. Even when you extensively use those club facilities to entertain clients. So, it is wise to talk to a tax lawyer about business expenses.

Virtually, all business expenses that are incurred in the course of earning income are fully deductible for tax purposes. However, you cannot claim capital property expenditure as a business expense. If you for example buy new premises what you paid for it is not treated as a business expense. But, a good tax lawyer will explain to you how to use the capital cost allowance (CCA) deduction to reduce your tax bill and whether you should be doing so.

Business expenses can be used to reduce the overall amount of tax you pay. Tax is paid on the profit made. Failing to deduct legitimate business expenses leads to more tax being paid than is strictly necessary. That is why firms hires tax lawyers to take a look how they are managing their business accounts. Often, they will uncover deductible expenses that the business owner is failing to claim for.

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