claiming ITC Qs? - business use tool expense Qs?

[garnet]

here's one for the accounting savy crowd here,

i've been read through all i can find on expenses and ITCs, but still have a few questions, maybe someone can help clear up

i've got a small general contractor biz ....started as independant C (sole proprietor) now INC. (since 2010), and have had registered GST # since the beginning

i've already sorted out approriate / record of my legit business expenses

the CRA doesn't list specifically ITCs by purchase types, other then to say 'operating costs' and 'purchases'

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/gst-tps/bspsbch/itc-cti/hwt/menu-eng.html

i just want to be sure ITC eligible purchases/expenses, includes;

(1) building materials used (purchased by me for specific job being done)
(2) consumable materials (paints, glues, caulking, etc.)
(3) tools (saw, accesories, blades, etc.)

i also haven't been able to be 100% certain, for tools (without making as CCAs) the extent (%) of being able to claim?

thanks



.

[garnet]

i forgot to ask, if i've already filed/paid my old GST # (pre-INC., 2009), can i re-file that with ITCs claimed (line 106)?

or do i just carry that forward and use for my (new GST #) 2010 GST filing?

[tenth]

Virtually everything you pay GST on to earn business income is eligible for ITCs. As a business, the GST is effectively flow-through, as they really only want to charge it once to the end personal consumer, instead of hitting everybody along the way. It doesn't matter if the GST relates to operating expenses or capital property.

The big exception that applies to everybody is meals and entertainment, which you can either recognize 50% as an ITC each month, or at the end of the year add 50% of the whole year as an adjustment to GST owing.

Since you're talking about different business numbers (I imagine), I would go back and amend the sole proprietorship GST return to get the ITC back. If you want guidance on how to do that, give the CRA a call (1-800-959-5525 and press * right away), they are actually very helpful with questions like this. And if they aren't, call back again and get a new representative.

[garnet]

yes, that's what i wanted to know, is if a GST return (on my old GST # account, when a sole proprietorship) was able to be re-filed...

...and ITCs claimed in the re-file, since they were not claimed (i didn't know at the time) when i paid that account in full

when i opened the INC./registered business, of course a new GST # was assigned, so the old GST # account was due in full at that date (early 2010)


switching away from GST topic, to business expenses;

my question above ^^ re: tools, consumables ....is if there is a % on those for write-off (without making them CCA) or since i use those 90%+ for business use, they are 100% write-off/expense?
(and are also 100% ITC)

thanks

ps
i have called CRA 800#, unfortunately the last 2 times, i must have got the worst agents, both times were not very good (hard to understand) and didn't really answer my questions :thumbsdow



Originally posted by tenth
Virtually everything you pay GST on to earn business income is eligible for ITCs. As a business, the GST is effectively flow-through, as they really only want to charge it once to the end personal consumer, instead of hitting everybody along the way. It doesn't matter if the GST relates to operating expenses or capital property.

The big exception that applies to everybody is meals and entertainment, which you can either recognize 50% as an ITC each month, or at the end of the year add 50% of the whole year as an adjustment to GST owing.

Since you're talking about different business numbers (I imagine), I would go back and amend the sole proprietorship GST return to get the ITC back. If you want guidance on how to do that, give the CRA a call (1-800-959-5525 and press * right away), they are actually very helpful with questions like this. And if they aren't, call back again and get a new representative.

[roll_over]

I could be wrong but i think it has to do with the date your company commenced.

Once you inc. your tools are 100%, laptop, office supplies, advertising, fuel and oil...

[garnet]

yes, expenses are greater once incorporated, which i am now

it's finding accurate info on % to claim under a sole prorietorship, of tools/consumables/materials purchased (have all reciepts) that i am not finding clear info on?




Originally posted by roll_over
I could be wrong but i think it has to do with the date your company commenced.

Once you inc. your tools are 100%, laptop, office supplies, advertising, fuel and oil...

[tenth]

An ITC is an ITC, there is no delayed recognition (like CCA). You get the ITC in the period you paid the GST.

Whether you want to claim 100% of it or not, is really up to you. I don't know what the technically correct treatment is of tools that you use for personal purposes a small percentage of the time, but given we're talking about 5% of the purchase price and you're using 90+ percent for business purposes, I'm sure I'd just claim 100% to be done with it, and take the small hit later on if you should have only claimed 90%.

[garnet]

yes, i understand alot more about the ITCs now ...i was just not knowing if this could be re-filed, or if CRA closed that old GST # account?? rebate possible??

...i think i'll try calling CRA / GST dept 2morrow and ask again about it, hopefully get better help then lasts i tried them?!

for the tools/consumables/materials expenses, it's all 99% strictly business use, i've been very careful of that ....i just haven't been able to find any info if can be 100% expensed, or if a % cap exists??

LOL ...it's like i need a special top-secret decoder ring for this stuff! :nut:



Originally posted by tenth
An ITC is an ITC, there is no delayed recognition (like CCA). You get the ITC in the period you paid the GST.

Whether you want to claim 100% of it or not, is really up to you. I don't know what the technically correct treatment is of tools that you use for personal purposes a small percentage of the time, but given we're talking about 5% of the purchase price and you're using 90+ percent for business purposes, I'm sure I'd just claim 100% to be done with it, and take the small hit later on if you should have only claimed 90%.

[tenth]

Assuming you're now talking about corporate tax deductions (or self-proprietor deductions prior to incorporation), checkout the link below on CCA classes for depreciable property:

http://www.dtmax.ca/eng/kb/index.html?page=keywords/t2/g5toc.htm (click on CCA/CEC)

Basically if the tools are under $500, they're class 12 (which are eligible for a 100% deduction), if they're more expensive they're class 8 (20% deduction per year on declining balance).

Anything that is a part of your cost to earn income (materials, consumables, etc), is deductible in the year incurred.

You might want to consider looking at a cheap-ish bookkeeper to handle this stuff for you.

[garnet]

it's the supposed "good" bookkeeper that started this LOL
besides, i like to know how everything works re: my own matters, even if using a pro (account, lawyer, etc)

good link, thanks
i've been reading through taxtips.ca and cra-arc.gc.ca too

is there another link that has even more detailed explaination of the class catagories?



Originally posted by tenth
Assuming you're now talking about corporate tax deductions (or self-proprietor deductions prior to incorporation), checkout the link below on CCA classes for depreciable property:

http://www.dtmax.ca/eng/kb/index.html?page=keywords/t2/g5toc.htm (click on CCA/CEC)

Basically if the tools are under $500, they're class 12 (which are eligible for a 100% deduction), if they're more expensive they're class 8 (20% deduction per year on declining balance).

Anything that is a part of your cost to earn income (materials, consumables, etc), is deductible in the year incurred.

You might want to consider looking at a cheap-ish bookkeeper to handle this stuff for you.

[tenth]

You really don't want more detailed unless you need to. More detailed is really the legalese in the act. I only read that if I absolutely have to. If you have just basic adds, those explanations should do the trick.

I'm sure you found the CRA's descriptions as well:
http://www.cra-arc.gc.ca/tx/bsnss/tpcs/slprtnr/rprtng/cptl/dprcbl-eng.html

[garnet]

yes, i have, thanks ...i was just looking if was a more detailed list of items under each class? maybe not?

i've gone through all my reciept summaries now, and added an ITC column, so next i'll re-file for previous GST, and now can include when i file next one

it's not so bad really, i have every thing sorted out per financial year, then grouped all applicable reciepts/expenses for type (auto, tools, materials, etc), then summarized these into a spread sheet ...as new month of reciepts is entered, the ITCs show listed for each & total per month/year! :)

i've just been going thru the 4022 & 4002 guides, which explain quite a lot too



Originally posted by tenth
You really don't want more detailed unless you need to. More detailed is really the legalese in the act. I only read that if I absolutely have to. If you have just basic adds, those explanations should do the trick.

I'm sure you found the CRA's descriptions as well:
http://www.cra-arc.gc.ca/tx/bsnss/tpcs/slprtnr/rprtng/cptl/dprcbl-eng.html