It’s coming, and there’s nothing you can do to stop it.
The hardest thing to understand in the world is the Income Tax. Einstein said that. And he was a genius, so imagine how the rest of us feel about the whole sordid affair—and when you’re operating as an Independent Contractor, the business can get a whole lot more convoluted.
One simply can’t write off tax season, but with it looming on the horizon, we’ve put together a list of tax deductible expenses that as an Independent Contractor, you can write off.
- Your vehicle: Fuel, parking, regular maintenance, oil changes, repairs, highway tolls, insurance: these are all expenses you can partially write off; it all really depends on how much you use your vehicle for work-related purposes. If you use your car 75 per cent of the time for work-related trips, then you can write off 75 per cent of these expenses. So be cognizant of your work-related vehicle expenses so you can take advantage of the deductibles you’re legally entitled to.
- Travel: Hotel accommodations, public transportation fares and 50 per cent of your food and entertainment costs are legitimate deductibles. It’s a pretty delicious benefit to working for yourself.
- Supplies: Any expenses you incur for the purpose of providing goods or services can be written off. For example, drugs and medication used in a veterinary operation, or cleaning supplies used by a plumber are legitimate deductibles. If you lease computers, cell phones, fax machines and similar equipment, you can deduct the percentage of the lease costs that reasonably relate to earning your business income.
- Professional Services: Accounting and legal fees incurred as part of any business advice or record keeping are considered acceptable deductibles by the CRA. You can also deduct any filing fees incurred for preparing your GST/HST returns.
Sometimes it all comes down to a numbers game, and when you're armed with knowledge, it's a lot easier to make sense of it all.