Tax time is fast approaching, yeah, I know it’s not even Christmas yet, but the time flies like crazy nowadays. However, you’ve been doing well this year keeping track of your receipts. However, before you get too excited and start adding that stuff up you may want to ensure that what you’ve collected is actually deductible.
You’ve got to get to work and back, however, CRA sees this as personal time, and, therefore, mileage is not deductible. We did have a public transit credit for a couple of years, however, the Liberals saw fit to eliminate this in 2017; apparently on the rich used it. If you’re a small business, and you’re home-based, any mileage you travel to a client or customer site, then you can claim that mileage or the cost of the automobile receipts.
The insurance you get to protect your home from fire, water, wind and other damage, including theft, is not considered deductible. However, if you have a small business you can claim a certain amount based on the home office deduction percentage you claim.
Charities That Don’t Qualify
We all like to help others from time to time, and giving to a charity is a great way to help others and make the world a better place. In order for you to be able to use a charitable receipt as a deduction, it must be registered with Canada Revenue Agency (CRA). At the time you donate, the charity should be able to tell you their status, as well a registration number should show up on the receipt (9 digits followed by RR, for example: 123456789RR0001.
Funds that you give to family or friends, even for a financial hardship, do not qualify for a charitable deduction.
The taxes you pay to the federal government for income taxes do not qualify for a deduction, as much as we’d love to be able to do that. Some taxes, such as property taxes, provincial sales taxes, business license fees, can be deducted from business income.
If you decide to have plastic surgery, or any other cosmetic surgery procedure, this would not qualify as a tax deductible medical expense. Any cosmetic surgery procedure must be considered medically necessary and prescribed by a doctor.
Those medications, such as Nyquil, Tylenol, Advil, etc. are not tax deductible; only medications prescribed by a doctor with a valid prescription receipt are deductible from your taxes. This also goes for supplements whether or not prescribed by a homeopathic, or other doctor; and that includes supplements bought from a pharmacy or nutrition store.
Child Support Payments
Payments you make to your spouse for child support are not considered deductible for tax purposes. The though behind this to make child support non-deductible and non-taxable was that there should be no direct tax advantages for supporting one’s own children whether living together or apart.
Penalties and Interest
There are times when things just get beyond us and we end up incurring penalties and interest when it comes to filing our taxes. Depending on how far behind you did get, these penalties and interest could get quite high. However, you can still not deduct these from your taxes.
What expenses are a tax deduction? And, what are just money well spent? That can be a confusing question. Using the tips above, should help you avoid creating a red flag that will get the attention of CRA, and then having it disallowed and penalties and interest added.