5 Expenses you cannot claim as a Business Owner
While we'd all love to find ways to maximize deductions, there are some expenses that even the most creative accountant can't magically transform into write-offs. Let's dive in!
5 expenses you cannot claim as a business owner
Focus on tax planning and legitimate deductions to maximize your tax savings!
1. Vehicle expenses of travelling from your home to office
Those gas fill-ups and parking fees for your daily drive from your home to your office are on your own dime. Think of it as a great time to catch up on podcasts or that audiobook you've been neglecting! Many business owners aren't aware of this and end up over-claiming those which would be denied in case of an audit.
If you work from home, this doesn't apply to you :)
2. Personal Clothing (unless it's got your company brand on it)
Have you ever tried to argue that your favourite lucky socks are an essential business expense because they help you make important decisions? Well, the CRA won't buy it. Unless your logo is splashed all over that designer suit or your business slogan is embroidered on your ball cap, your wardrobe won't be picking up the tax tab.
3. 50% of Meals and Entertainment
We all love to wine and dine with clients, but the CRA isn't quite as enthusiastic about footing the entire bill. While you can claim half of those business-related restaurant outings, it's not a free buffet. So, no, you can't count that gourmet steak dinner with your dog as a business expense (unless your dog is your official company mascot).
4. Interest and Penalties Paid to CRA, Parking Fines
Oops, parked in a no-parking zone? Late paid your taxes with interest and penalties? All of these are your responsibility. But hey, maybe you can use the CRA's interest rates as inspiration for your next budget meeting – they're certainly eye-catching!
5. Invoices Received in Your Personal Name
Did someone send you an invoice with your name on it instead of your business's? Well, that's a no-go. The CRA is quite particular about expenses beingproperly documented in your company's name. The HST and the expense will be rejected by the CRA if the invoice is not in the name of your business.
Don't try to outwit the CRA; they've seen it all. Focus on legitimate deductions (tax planning and not tax avoidance) and consult with a tax professional to ensure you're maximizing your tax savings within the rules. Remember, tax season comes every year, but the penalties for missteps can stick around longer than that regrettable neon tie you bought for your last business meeting!