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Did You Know?!?!?! Some Tax Tips That You May Not Know

November 27, 2008

Did you know?!??! Some tax tips that you may not know about.

1) Generally meals or other entertainment related expenses are only partially deductible for tax purposes. However, did you know that in a year, a company may deduct 100% of the expense for 6 events where all the employees of the company are invited to attend? Examples of these types of events would be Christmas parties or summer picnics.

2) If you own more than 40% of your company, and you are an employee of that company, you are likely EI exempt. This means that you do not have to make EI remittances to the government on your earnings. This is a bit of a catch-22 though. You’ll have more cash to use in your business, but if you have to close up the business, you really can’t collect EI as being “laid-off” since you weren’t paying into the EI system.

3) Life Insurance. As a business owner, you likely have life insurance. Did you know that this is not a deductible expense for your business? However, even if it isn’t a deductible expense for your business, it is still better for the company to pay for it, since you’re paying for the premiums with pre-taxed revenues, rather than out of the salary that you receive from your company which is “after-tax” dollars.

4) Back to Meals and Entertainment expenses. Did you know that since you only get to deduct 50% of the expenses for most meals and entertainment expenses, you only get to claim 50% of the Input Tax Credit for GST purposes?

Dayna Holland is a Chartered Accountant whose mission is to make numbers and taxes less intimidating to business owners. Most of her career has been working with various High-Tech and telecommunications companies to minimize their tax burden. Now running her own company, she currently works with a variety of businesses to improve their profitability and handle their taxes.