I hope you are all doing well. I moved recently and now I have my own office, exclusively used for my sole proprietorship (renting).
The thing is, I do not have any bills for heat, internet etc. as I pay an all inclusive rent.
Lets say my all inclusive rent is $3000/month and my office is 15% of the entire house, would I be able to deduct $450/month?
Let me guess, it is not that simple, right? In my rental contract it says that heat, internet, electricity, furniture, garbage, natural gas are included. I believe I can not use the all inclusive rent amount since some of the cost is not related to my business (e.g. garbage).
My questions:
a) Do I have to ask my landlord to break down the all inclusive rent so I can ensure a proper calculation?
b) What do I do if my landlord is unable do to that?
Except the rent includes the furniture and garbage - using your answer he /she would be including too much of the rent.
I would exclude an amount for the furniture and garbage, then apply the square footage amounts as usual. Get the landlord to give you a percent of the rent that is for furniture and garbage. (IN WRITING so you can back it up if ever asked by CRA)
If the furniture was used exclusively for business then the rental of it can be deducted. Same as photocopiers and other office equipment. And typically garbage collection is included in our property taxes or condo fees, which a sole proprietor can deduct a portion of. I have never broken out the garbage collection fee from someone’s property tax before.
It is important to identify the purpose and use of the panels. Is the rental property off-grid? Do the panels increase the likelihood of the property to get rented? Who is using the energy generated by the panels? Only then you can determine the appropriate classification.
Yet another half-explained, half-answered question, with dubious results as to overall accuracy. Sigh.
This is why actual tax professionals do tax work. We know what questions to ask, how to parse and phrase properly and how to get to an answer that is accurate.
The only thing in your favour: any change is probably too small for CRA to notice or bother with.
Thank you for your feedback! Feel free to ask me the “right” questions, we might come to an answer with a higher quality which can be beneficial to all of us…
" Feel free to ask me the “right” questions, we might come to an answer with a higher quality which can be beneficial to all of us"
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Of course you will be calculating your income from a business for tax purposes pursuant to ITA S9, but how do you think that the provisions of ITA S18(1)(a) apply to your question?
I would have thought that you would have referenced that, and started at that point.
In addition, I assume you have checked whether your business meets the conditions of S18(12)(a) to allow anything.
(And if so, of course it is subject to the limitations in S18(12)(b))
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Check out the above and apply them during your ongoing bookkeeping to make matters more consistent when it comes to eventually using the resulting figures for the purposes of tax reporting.
(Ideally that business income tax return will be prepared with the additional assistance of somebody with a working familiarity with the wording of the ITA).
No. Feel free to contact someone on a professional, paid basis who does this for a living. Internet forums are NOT the appropriate location to obtain advice.
If it’s free…it’s at best worth the price you paid for it.
I personally have “no interest” in asking you the “right” questions unless you’re paying me to do so. (Discussing tax specifics with other professionals is a different issue.)
In my rental contract it says that heat, internet, electricity, furniture, garbage, natural gas are included. I believe I can not use the all inclusive rent amount since some of the cost is not related to my business (e.g. garbage).