i am working on a t2 - my client gets significant $$ parking tickets because their store does not have adequate parking nearby. my research indicates that 'usually not deductible.
does anyone have any advice
I heard of one dispute where CRA allowed some parking ticket (or maybe it was another kind of traffic ticket), but you are correct - generally not deductible.
First, you have to ask, “Whose fault was it?” Did the employer FORCE an employee to park in a “no parking” zone? If so, perhaps it is the employer’s responsibility to PAY the ticket, but still not likely an expense that is deductible for tax purposes.
If there was a valid reason that the business MUST incur parking tickets in order to generate taxable revenue, then you might have good argument for the tickets to be deductible. (In your example, I can’t figure out who is receiving the tickets - the business or it’s customers?)
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For Accounting purposes you can deduct parking tickets on the income statement.
The income statement gets transferred to GIFI S125
On Schedule 1 Line 128…add back in the parking tickets as they are not tax deductible.
They need to find a long term solution for parking…maybe they could Rent a spot from a nearby lot… at least then the Parking space Rent would be deductible.
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Depends also who issues the ticket, is it bylaw, or is it someone like Impark…
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How does that make a difference?
because that is not a ‘fine’ in the same sense of the word… Just a surcharge by a business
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Huh. Never thought about it, but that makes sense. So, a “ticket” from Impark is more like just an extension of the parking fees you were already paying, so then - deductible.
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The municipality authorizes people/firms to issue parking tickets. I am authorized to issue tickets for my property (I have student rentals next door). The City gives me real tickets to issue, not a fee notice. I imagine most municipalities work that way.
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thank you for your replies. It is the owner that parks in front of shop to bring merchandise in. I suspect it is the city issuing the ticket
From Taxtips.ca: > # Penalties and Fines are Usually Not Deductible Business Expenses
Income Tax Act s. 67.6, 18(1)(t)
Fines and penalties imposed after March 22, 2004 by federal, provincial, or municipal governments in Canada or by a foreign country are not deductible.
According to Interpretation Bulletin IT-104R3, this includes “any fines or penalties imposed by a government, a government agency, regulatory authority, court or other tribunal, or any other person with a statutory authority to levy a fine or penalty”. Municipal parking tickets issued after March 22, 2004 are thus not a deductible expense. IT-104R3 has been replaced with Income Tax Folio S4-F2-C1: Deductibility of Fines and Penalties, which indicates that "the key provision is section 67.6, which specifically prohibits the deduction of a fine or penalty imposed under a statute".
The non-deductibility does not apply to penalties incurred pursuant to contracts, such as late performance penalties. If you are in doubt about whether an amount you have paid is a fine or penalty that is not deductible, read the Income Tax Folio. If it is still not clear to you, check with your professional tax advisor (CPA).
Interest expense charged on overdue amounts are not considered fines or penalties. However, the Income Tax Act specifically disallows the deduction of penalty interest paid regarding late income tax, GST/HST, or Air Travellers Security Charge payments. The non-deductibility of penalty interest re GST/HST and Air Travellers Security Charge payments applies to amounts paid in taxation years that begin on or after April 1, 2007. IT-104R3 has not been updated to reflect this change.
If your corporation has paid expenses incurred to earn business or property income, and these expenses are not deductible for tax purposes, the non-deductible amount is added back to income on Schedule 1 of the T2 tax return.
If your unincorporated business has paid expenses incurred to earn business or property income, and these expenses are not deductible for tax purposes, the non-deductible amount is excluded from expenses in the statement of business or professional activities included with the tax return.
Of course, keep in mind here that normally parking at your place of work is not a deductible expense in any case…
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Any kind of ticket or penalty are not deductible I believe
Thanks for clarifying.
I recently came across this article.
https://www.lucas.cpa/blog/can-you-deduct-fines-and-parking-tickets-on-your-taxes
In general, fines and penalties for breaking the law are not tax-deductible. This means that if you receive a fine for violating a traffic law or for breaking any other law, you cannot deduct the cost of the fine on your tax return. The Canada Revenue Agency (CRA) specifically disallows the deduction of any fine or penalty imposed by a government, court, or regulatory body.
However, there are some exceptions to this rule. For instance, if you receive a parking ticket while conducting business, you may be able to deduct the cost of the ticket. This is because the cost of the ticket is considered a legitimate business expense. To qualify for this deduction, you will need to keep detailed records of the parking expenses and demonstrate that they were incurred while conducting business. You should also keep a logbook of your business trips, noting the date, destination, and purpose of the trip.
Thoughts?
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