It’s tax season and whether you know it or not, if you own a small business in Canada, you could be missing out on hundreds, even thousands of dollars each year simply because you are just unaware of the deductions available to you. This is a major problem, especially when it can be the difference between a new car, or a new location for your company that you are missing out on. Whether you prepare your own tax returns or have an accountant do it, if you own a small business in Canada, you need to pay attention to these frequently missed tax deductions.

Private Health Services Plan Premiums as Income Tax Deductions

Did you know that if you are self-employed you might be able to deduct all or a part of the premiums you pay to a private health service plan (PHSP) in order to insure both yourself and your family? In order to be able to deduct your PHSP premiums, certain conditions must be met. For example, your net income from self-employment (excluding losses and PHSP deductions) for the current or previous year must be more than 50% of your total income, or, your income from sources other than self-employment must be $10,000 or less for the current or previous year and you are actively engaged in your business on a regular and continuous basis, individually or as a partner. In addition, various limitations apply to the amount which can be deducted, depending on whether or not you have employees. If due to these limitations you cannot claim the premiums as a deduction, they can always be claimed as a medical expense.

Hiring Your Spouse Or Child Will Give You A Tax Deduction

The cost of an employee’s wages is a business expense, no matter if the employee is a spouse, child or a complete stranger. The only difference is that hiring your own spouse or child also gives you the chance to do some income splitting. When you hire your spouse or child, you may be able to drop your net income into a lower tax bracket, receiving a nice income tax deduction. Furthermore, if your child has no other income, you will be able to eliminate income tax on the first $11,474 for 2016 ($11,550 for Qc) by using their basic personal exemption.

Scientific Research And Experimental Development Tax Credits

Claiming tax credits for SR&ED is not only for big businesses or even an incorporated business. Small Canadian businesses are just as eligible. The best thing about this is that the tax credit is refundable, so if you make zero profit, you will get the refund back in cash. This can be a complex and specialized area, so it is best to contact a professional for help.

Apprenticeship Job Creation Tax Credit

The Apprenticeship Job Creation Tax Credit (AJCTC) allows you to get a non-refundable Tax Credit of up to $2,000 for hiring an apprentice. The apprentice would have to be in his or her first two years of the apprenticeship program. You can take on an apprentice as a sole proprietor, too.

Home Business Tax Deductions

You might already be aware of the Home Business Tax Deduction, but are you aware of the extent of tax deductions you can claim when you operate from a home-based business? This can range from a portion of the interest on your mortgage to your electricity and heating bills and even to a portion of the cost of cleaning materials.

For more information, speak to one of our personal accountants at Feldhammer Dixon Kwo Inc.