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If you’re self-employed, a business owner, a freelancer or an independent contractor, you’re certainly not alone. Statistics Canada says 2.5 million Canadians identify as self-employed, representing about 15% of working Canadians. That number has been rising steadily as employers have contracted out services once reserved for full-time or part-time workers.
In fact, a recent study by Intuit Canada suggests that 45% of Canadians will be self-employed by the end of next year. The Intuit survey found that 41% of those self-employed want to supplement their regular income while 47% are self-employed to improve their work-life balance.
The gig economy is allowing people to do self-employed work in a flexible fashion, according to Intuit Canada president Jeff Cates, who also explained that many new jobs coming into the market are part-time, so people are looking to augment their income with self-employed options.
Being self-employed means you are entitled to a variety of income tax deductions, such as:
The self-employed can deduct 100% of advertising costs related to Canadian radio, television and newspaper ads. Some magazine ads may also be deductible. You can also deduct the cost of designing, producing, and distributing advertising materials including flyers, business cards and promotional websites.
Home Office Expenses
If you rent an office or work out of your home, you can deduct related expenses for the space. To determine your home office expenses, calculate the size of your home office as a percentage of your home’s total size. For example, if your home office is 50 square meters and your home is 1,000 square meters, your office is 5% of your home, which means you can deduct 5% of your mortgage interest or rent, utilities, home insurance, security monitoring fees, repairs and other related costs. You can also deduct the cost of cellphones and internet access, assuming they are essential for your job.
Entertainment and Travel Expenses
If you travel to a convention, meeting or other business-related event, you could deduct all of your travel expenses, including public transportation fees, hotel costs and conference fees. You can also deduct 50% of your meal and entertainment costs, including those incurred while you are at home and taking a client for lunch, for example.
If you have a vehicle you use exclusively for your business, you can deduct all of the expenses related to that vehicle, including gas, insurance, repair costs and parking. If you use your vehicle for both business and personal use, you can deduct a percentage of those costs based on how often you use your car for business.
To make sure you’re not missing anything, find last year’s tax materials and make a list of all the slips and receipts you needed for 2017; chances are you will need the same (or similar) ones for 2018. This process will also help you discover if there’s anything missing, such as an invoice, a charitable donation receipt or an RRSP contribution slip.
The key is to get organized and stay that way throughout the year. That way, there will be no surprises come tax time. Your financial consultant can help steer the way.
Dwayne Rettinger, Investors Group Financial Services Inc.
This is a general source of information only. It is not intended to provide personalized tax, legal or investment advice, and is not intended as a solicitation to purchase securities. Dwayne Rettinger is solely responsible for its content. For more information on this topic or any other financial matter, please contact an IG Wealth Management Consultant.