Looking to write off work clothing..

[Hallowed_point]

So this is my first year in business as a contractor. As a contractor, I have spent probably 2 grand or so on clothing (reciepts all saved) for dress shirts, ties etc for work. I am required to wear business attire as per the buildings standards.

How do I write this off come tax time? It seems the CRA website says that you cannot write off clothing which I'm sure is bs :dunno:

Thanks for any tips, prefer to hear from other contractors who have dealt with this and haven't gotten burned by the CRA :D

[lint]

you can't.

[schocker]

lol, no you cannot write it off.
See this court case for example:
http://decision.tcc-cci.gc.ca/en/2003/2003tcc482/2003tcc482.html

[Guillermo]

Originally posted by Hallowed_point
So this is my first year in business as a contractor. As a contractor, I have spent probably 2 grand or so on clothing (reciepts all saved) for dress shirts, ties etc for work. I am required to wear business attire as per the buildings standards.

How do I write this off come tax time? It seems the CRA website says that you cannot write off clothing which I'm sure is bs :dunno:

Thanks for any tips, prefer to hear from other contractors who have dealt with this and haven't gotten burned by the CRA :D

isn't is so unfair that the government makes you pay for your own clothing??? :whipped: :whipped: :whipped:



:rofl:

[Hallowed_point]

Haha ok I'm not retarded, I don't expect to be able to write off skate shoes and t shirts ...

This is strictly for work clothing ie dress pants, dress shirts stuff that I do not wear outside from work! There must be a way :dunno:

[schocker]

Originally posted by Hallowed_point
Haha ok I'm not retarded, I don't expect to be able to write off skate shoes and t shirts ...

This is strictly for work clothing ie dress pants, dress shirts stuff that I do not wear outside from work! There must be a way :dunno:
Read the court case I posted, it is not possible. I am also a contractor and do not expect to write my clothes off :dunno:

[Guillermo]

^^really? you think the government should buy everyone's work clothes for them? just who is supposed to pay for all of this? should they then increase your income tax by $2000/year?

[adidas]

Buy business attire at walmart. Problem solved.


http://gifsforum.com/images/gif/troll%20face/grand/s4xqhk.jpg.gif

[yellowsnow]

Work clothes are exempt. I think it's dumb too, but them the rules. You can write off a lot of other things tho.

[yellowsnow]

Originally posted by Guillermo
^^really? you think the government should buy everyone's work clothes for them? just who is supposed to pay for all of this? should they then increase your income tax by $2000/year?

lol, writing something off doesn't mean it's free! Just means you can deduct it from your income so you don't have to pay income tax on those amounts.

[Guillermo]

^^yes i understand - just trying to make a point :D

[jutes]

Originally posted by Guillermo
^^really? you think the government should buy everyone's work clothes for them?

Gobernment paid for all my work clothing. :trollface:

[J-hop]

Originally posted by schocker
lol, no you cannot write it off.
See this court case for example:
http://decision.tcc-cci.gc.ca/en/2003/2003tcc482/2003tcc482.html

OP asks if he can write off business uniform. You say no on the basis of a court case where some broad was caught trying to write off cocktail dresses as business uniforms??

OP I would get in contact with a tax accountant, there is actually a lot more you can write off than people think. My friend worked as a contractor for a bit and has now opened their own home practice. I know this person writes off essentially everything even a portion of their car maintenance costs as their personal vehicle is used for work purposes. I don't think anyone on here other than people that work or have worked as tax accountants are going to be able to tell you...

[AndyL]

Now... Depending on how ya deal with things...

Clothes are out... but if your an incorporated company, you can write off a service like... a uniform service... basically leasing your clothes... Leases are good :)

[Z_Fan]

OP

Do you work in the same location all the time?

Do you work for one company only?

Do you use your equipment or is the equipment supplied to you?

Do you set your own schedule or do you have to be at the work site at a certain time?

Can you send someone else in your place to do the work?

[lint]

Originally posted by J-hop
OP asks if he can write off business uniform. You say no on the basis of a court case where some broad was caught trying to write off cocktail dresses as business uniforms??

OP I would get in contact with a tax accountant, there is actually a lot more you can write off than people think. My friend worked as a contractor for a bit and has now opened their own home practice. I know this person writes off essentially everything even a portion of their car maintenance costs as their personal vehicle is used for work purposes. I don't think anyone on here other than people that work or have worked as tax accountants are going to be able to tell you...

a suit is not a "business uniform". as someone who was required to wears suits for a gig dt and who has a good tax accountant, this is not something that you can write off. period

[msommers]

Work clothes would include Nomex coveralls, not a suit and tie.

[schocker]

Originally posted by J-hop
OP asks if he can write off business uniform. You say no on the basis of a court case where some broad was caught trying to write off cocktail dresses as business uniforms??
wtf is a business uniform. dress clothes are dress clothes so this is pretty much the same situations :confused:


[12] In the course of her submissions, the Appellant raised several issues which had not been pleaded but since no substantial objection was made on behalf of the Respondent, I propose to deal with them. First, the Appellant contends that business clothing expenses of $12,625 were claimed in what she said was "a sincere belief that their purchase was necessary to my professional image and thus to getting and keeping clients". She spoke of corporations sending their employees to image counsellors and said dressing for clients was of utmost importance in creating the requisite "power image" and that "a business suit for instance presents a corporate image of trust, security and stability, particularly important for the banking industry. That was the example they used. And the banking industry has often been my clients". Relying on Schedule II, Capital Cost Allowances, Class 12, items (i) and (k),[7] the Appellant now seeks the Court's approval to claim capital cost allowance with respect to the items of clothing because they were "uniforms required to obtain and keep contracts with my clients".

[13] The Appellant's argument that the clothing purchases should be treated as a capital cost item is totally without merit. There is no basis upon which her "outfits" could be considered as a "uniform". The items of clothing in issue were personal wear and were not solely necessary for her conduct of her business activities. Nor is there any evidence that she was required to use any of her clothing or accessories to appear on stage or in any related activity. Accordingly, her alternative claim with respect to the availability of these items for capital cost allowance must be rejected.

[Canucks3322]

Any clothing that can be worn normally cannot be expensed, it's not rocket science.:rolleyes: So OP, no.

[J-hop]

Originally posted by lint


a suit is not a "business uniform". as someone who was required to wears suits for a gig dt and who has a good tax accountant, this is not something that you can write off. period

I'm not saying it can, just the court case given as an example seems apples to oranges, lady is talking about needing to feel empowered and display strength ahahaha, aka they pulled out the black sexy dress and made her explain why she tried to write if off. Not hey i'm a contractor and to conform to the dress code I had to spend 2k in work clothes, can I write this off...

[eckostyle]

Canucks3322 is right - look at the case of Huffman v. The Queen

- court allows this due to the odd facts, as he could not wear these clothes normally

[tenth]

Originally posted by J-hop


OP asks if he can write off business uniform. You say no on the basis of a court case where some broad was caught trying to write off cocktail dresses as business uniforms??

OP I would get in contact with a tax accountant, there is actually a lot more you can write off than people think. My friend worked as a contractor for a bit and has now opened their own home practice. I know this person writes off essentially everything even a portion of their car maintenance costs as their personal vehicle is used for work purposes. I don't think anyone on here other than people that work or have worked as tax accountants are going to be able to tell you...
A portion of car maintenance when a personal vehicle is used for work purposes is legit (keep your km logs though). Deducting suits for work is, at best, crazy aggressive, and if they ever reviewed it, you'd be denied 10 times out of 10. That doesn't mean you can't try it, but better make sure you can afford the bill (plus interest). Hopefully you don't go buck-wild on the deductions since if anything aggressive gets noticed it will definitely raise a red flag on the rest of your return.

[you&me]

I know someone that purchases gift cards as "gifts for clients", as those are generally something that can be written off. He then uses those gift cards to purchase work attire.

Not sure if it's at all legal, or if it even works, just sayin'...

[Z_Fan]

Bottom line OP is you can expense whatever the hell you want. Just put your clothing as "Miscellaneous", or "Maintenance" in your books. You will get your tax break and the big man won't know. Just don't put it down in its own category as "Clothing".

Providing your expenses are normal looking, not extreme, no flags will be raised and your tax situation is unlikely to receive scrutiny.

Also lets not forget that in the example, the individual had NOT even filed tax returns for many years in a row.

Pay your tax. And if you slip in the odd business suit in to the misc expenses category, no one is going to know or care. (Except you) So, if you can live with it, go for it. Just know you may have to pay any penalty if you ever get reviewed.

I wear my clothes. I buy my clothes.

:devil:

[Hallowed_point]

Originally posted by Z_Fan
OP

Do you work in the same location all the time?

Do you work for one company only?

Do you use your equipment or is the equipment supplied to you?

Do you set your own schedule or do you have to be at the work site at a certain time?

Can you send someone else in your place to do the work?

Yes

Yes

Yes and No, I supply my own cell phone

Specific hours of work as per the contract

No

[Hallowed_point]

Gee god forbid someone trying to save a few bucks from the CRA. I'm sure you all want to send them every cent you can! :rolleyes: So I guess I have to talk to an accountant, it can be done but its not so straightforward...

[Hallowed_point]

Originally posted by Z_Fan
Bottom line OP is you can expense whatever the hell you want. Just put your clothing as "Miscellaneous", or "Maintenance" in your books. You will get your tax break and the big man won't know. Just don't put it down in its own category as "Clothing".

Providing your expenses are normal looking, not extreme, no flags will be raised and your tax situation is unlikely to receive scrutiny.

Also lets not forget that in the example, the individual had NOT even filed tax returns for many years in a row.

Pay your tax. And if you slip in the odd business suit in to the misc expenses category, no one is going to know or care. (Except you) So, if you can live with it, go for it. Just know you may have to pay any penalty if you ever get reviewed.

I wear my clothes. I buy my clothes.

:devil:



:thumbsup: Thanks for the advice, the main thing is not getting ridiculous and fly under the radar with teh govt

[schocker]

Originally posted by Hallowed_point
Gee god forbid someone trying to save a few bucks from the CRA. I'm sure you all want to send them every cent you can! :rolleyes: So I guess I have to talk to an accountant, it can be done but its not so straightforward...
No, all of us would write them off if we could. I for example wear jeans to work many days and that would be a nice write off for me.

[Z_Fan]

Originally posted by Hallowed_point


Yes

Yes

Yes and No, I supply my own cell phone

Specific hours of work as per the contract

No

Based on your answers, unfortunately, you are not a contractor at all. You are merely one of the many many people who think they are being smart, when in fact you are more than likely just being taken advantage of by your employer. (Depends on how good you really have it with your contract) -> However, irregardless of what your contract states, you are unquestionably an EMPLOYEE!

The CRA would consider you an employee of the company for which you work. Many people put themselves in this situation. In general, it is foolish to do so unless very well thought out. A full understanding of EI, CPP, Payroll Tax, Accrued Vacation benefit, other Pension, Paid Breaks etc was all taken in to consideration when you wrote up your contract.

You are far better off being employed by that company under most circumstances.

Your "contract" is merely a personal services agreement. You are in no way a contractor as far as the CRA is concerned. Any time you wish to force the company to make you an employee (which would be a good idea) you can either ASK them, or you can force a review.

You are not a contractor because:

You own nothing. You do not use your equipment. You do not dictate when you will work. You do not dictate where you will work. You do not have the ability to send another person in your place. You have no opportunity for profit or risk of loss. You work for ONE company and in fact, my friend, are an employee. Don't worry, you're not alone. So many people, especially in IT, think this is a good idea. It is a good idea to become a contractor if you truly ARE a contractor.

Indications are if you go to work at several locations. If you can send whomever you wish to perform the tasks. If you make a good decision buying material, and make yourself a quick $2k because you got a good deal. If you use your own hardware/equipment and place of business. If you have multiple corporations that send you cheques for your work because you have business deals with several. Then you're a real contractor.

Too many people do not research this topic well enough. Everyone thinks that this is in some way a step towards independence because they can say they are a contractor. When in fact, you're not. You're just an god damn employee who doesn't understand why companies like this! Real companies love this! They get you on the cheap, avoid the taxes, and in most cases, the poor bastards who agree to the contract actually think they are a contractor. Hah.

Please read, educate yourselves.

Most importantly, sit down, understand how EI, CPP and all the other things work, the exact percentages, AVB, any other purks the company offers employees, and make DAMN sure that once you've added all that up, you're getting paid at least %20 MORE than what they would have had to pay out as en employee or you're getting fucked. An employee that makes $80k per year could easily cost the employeer $100k per year.

http://www.cra-arc.gc.ca/E/pub/tg/rc4110/rc4110-e.html

If you worked for $25/hr, example, and went contract for $30/hr, you just got royally fucked.

[me_dennis]

i got into a debate with my buddy about this. he's a comic book artist so he's self employed.

he would always say, when he travelled to comic conventions, that he would have to present himself to clients and so he would go out and buy dress shoes and dress clothes because he needed to look presentable.

my fiance is a CA and i've asked her about this and she said clothing can only be expensed if you wouldn't need them otherwise (ie work boots, nomex coveralls, etc)

but the guy being stubborn as he is, insisted that it works.
his "accountant" (not designated at all) said it works, so he's probably doing something shady haha.

[Z_Fan]

It's a lot easier to expense stuff like this when you have a corporation to hide behind. Your corporation files taxes, and so do you personally. But the corporation can easily absorb a couple grand in to various expense accounts. Office supplies. Misc. Maintenance and repair. Whatever.

Anyhow, the OP isn't a contractor anyhow, so it is all irrelevant. His clothes are his problem - even if he actually was a contractor - the CRA doesn't allow the expensing of clothes.

I remember when the CRA allowed expensing GOLF! Fuck, those were the days! Seems to me a I golfed a lot more back then. Hmmm.

[Cos]

Originally posted by Z_Fan

....

:clap:

My boss was a real contractor and told me all of this. I was surprised at the number of people who get effed out of their contractor status. I think he said you have to have 30% of your income come from another source in 3 years.

He had his own computer, phone, office, car, and other things.

When the recession hit his 3 clients closed up like clams and we were the only place left. He stuck it out for a year and a half an recently became an employee just because he couldnt get that spread from other clients.

[benyl]

Originally posted by Z_Fan

If you worked for $25/hr, example, and went contract for $30/hr, you just got royally fucked.

:werd:

I was once told that you take the yearly salary that you want and then lop off 3 zeros.

So if you want to make $70K / year as an employee, you better ask for $70 / hour as a contractor, or else you're getting fucked.

[Myrrinda]

Z-Fan's right OP, it sounds like you aren't a contractor. Does your employer remit CPP, EI and income tax on your behalf? If not, they'd better look into whether or not they should be.

Do you invoice them for your work?

[Hallowed_point]

Originally posted by Myrrinda
Z-Fan's right OP, it sounds like you aren't a contractor. Does your employer remit CPP, EI and income tax on your behalf? If not, they'd better look into whether or not they should be.

Do you invoice them for your work?

Well this is all new to me as this is my first year doing this. I have my own business number and gst number. My contract explicitly states that I am a contractor and not an employee. I invoice for my hours worked as per the contract and gst. I really hope I don't get totally f&cked come tax time :banghead:

*I don't believe that I need to pay into EI as I am a sole proprietor

[Myrrinda]

This might help you figure it out:
http://www.cra-arc.gc.ca/E/pub/tg/rc4110/rc4110-e.html#employee_selfemployed

[triplep]

Originally posted by Hallowed_point


Well this is all new to me as this is my first year doing this. I have my own business number and gst number. My contract explicitly states that I am a contractor and not an employee. I invoice for my hours worked as per the contract and gst. I really hope I don't get totally f&cked come tax time :banghead:

*I don't believe that I need to pay into EI as I am a sole proprietor

No you probably won't get screwed come income tax time, at least not this time, and this early. Chances are, if they ever do an audit on you etc, it will be down the road. And at that point in time you will most likely owe penalties and interest payments.

Also, there are other ways you can get screwed. If it turns out your company has you as self employed, but you truly were supposed to be an employee and pay all those wonderful deductions, then you will also own for those. There have been a number of times, when companies do this, and after a CPP EI ruling, it turns out that those individuals should have been considered as employees, and all the CPP and EI are owed.


Also, why all the hate for the CRA??? You do realize that they are only "a company" hired by the government to enforce the GOVERNMENTS rules and regulations, and collect the monies owed to the government.

If you have a problem with the taxes you pay, it isn't CRA's fault, it is the governments. They are just doing what any collection company does, collecting the money that is owed to their client.

[garnet]

having been through audit i can say that clothing, unless specialized for a specific work, won't be allowed to expense

simply including as "misc" won't fly, as your purchase reciepts will still need to be produced, and that will show

any proper reciept included for expenses claim will need to be clear and give company + GST # on them, especially if intended used to claim ITBs

the guy using "gift cards" is in for a surprise come audit time

[Z_Fan]

Originally posted by Hallowed_point


Well this is all new to me as this is my first year doing this. I have my own business number and gst number. My contract explicitly states that I am a contractor and not an employee. I invoice for my hours worked as per the contract and gst. I really hope I don't get totally f&cked come tax time :banghead:

*I don't believe that I need to pay into EI as I am a sole proprietor

Here is one of the problems.

If they are not taking your income tax off, and you have set up a business. (Which you have) Your business is responsible to pay you. (You should therefore have a business payroll account set up) And my advice if you are going to continue down this road is to set one up. Lots of noobs don't and their accountant says not to bother. But if you are making lots of money, you need to remit monthly or when the tax man cometh at the end of the each year...you're not going to like it!

Also, you are required to participate in CPP. But, you now must pay DOUBLE. That's because you have to pay your portion, as well as the company portion. (Since you are the company, the company (aka you) pays both parts. Thus the savings from EI is completely wiped out, and you no longer have any employment insurance should your contract be terminated.

What your contract states specifically is completely irrelevant as far as the CRA is concerned. You can continue and it won't matter to the CRA a whole bunch as long as you pay your taxes. They don't give a fuck about you. You're just one tiny guy in a big ocean. BUT, unless your situation really really really benefits you (and it doesn't really sound like it does to me) you're better off being an employee.

Anyone who goes to work at the same place, for an agreed upon hourly rate, with hours defined by the payer, using the payer's equipment, etc, is an employee and should be an employee because that is what is best for that individual in almost all cases. Your contract does not actually make you a "contractor" in the CRA's eyes. In most cases, like yours, it is really a personal services contract. This is not really of any benefit for you to have. And it is worsened by the fact that you charge GST, and since your expenses will be minimal (you have hardly any really) you'll need to remit virutally all of that GST that is collected. Just another reminder to save your money for your remittance.

Anyhow...I could rant about this stuff for a long time. But no point. You'll figure it out. I have a friend who has been doing this contractor (as you are) for years. I think right about now he just wishes he was an employee. Doing all this shit only complicates your life. But you're responsibility is still identical to the payer (your employer). So why the fuck do it at all unless you have massive increase in benefit by doing it. Know what I mean?

[Chandler_Racing]

Originally posted by Hallowed_point
Gee god forbid someone trying to save a few bucks from the CRA. I'm sure you all want to send them every cent you can! :rolleyes: So I guess I have to talk to an accountant, it can be done but its not so straightforward...

God forbid someone covers their honest tax liability within the constraints of the income tax act.

Claiming suits is not about saving a few bucks, it's about fraudulently mis-representing purchases within your corporation as deductable expenses.

Hopefully, you get audited as I'm not interested in picking up the slack you leave in terms of under remitted taxes.

For bonus points, I would hope you get assessed as an employee by CRA also as you likely do not meet the actual definition of a contractor.

[Z_Fan]

Above is true, and what is funny at that point is that although you may think he'd be in trouble, the truth is that his employer is the one who's gonna be up shit creek. They'll be the ones who have to come up with the missing EI, CPP, etc payments. :poosie:

It's a fine line.

I do all my own accounting, and I do it legit. I read every single rule, and I follow the rules. If the tax man ever wants to audit me, they'll end up owing me money for shit I didn't expense that I was too fucking lazy to bother. :poosie:

[Z_Fan]

Just did a quick calculation for "contractors" to think about.

Example.

You are an employee paid $25/hr. You get 2, 15 minute breaks each day, and 1 30 minute break. All paid. You have 3 weeks of paid vacation each year. AVB=7.5%. Your company offers a pension, 2.5% you and they match. (This seems a fairly possible situation for many, so it's a good example)

In this scenario, your cost to the employer $35.04/hr of actual work. Therefore, any contract you set up you will want an absolute minimum of $40 via contract.


Example #2.

You are an employee paid $25/hr. You get 2, unpaid 15 minute breaks, and 1, 30 minute paid break. You get 2 weeks of vacation pay. AVB=5.0%. Your company offers no pension.

In this scenario, your cost to the employer is $31.88/hr of actual work. IMO you want at lest $35-$37/hr via contract.


Both examples use:

40 hours of work per week (scheduled). No overtime.
CPP and EI rates from 2010, maximums reached.
12 days of statutory pay. (I believe that is right for Alberta)

[Hallowed_point]

Originally posted by Chandler_Racing


God forbid someone covers their honest tax liability within the constraints of the income tax act.

Claiming suits is not about saving a few bucks, it's about fraudulently mis-representing purchases within your corporation as deductable expenses.

Hopefully, you get audited as I'm not interested in picking up the slack you leave in terms of under remitted taxes.

For bonus points, I would hope you get assessed as an employee by CRA also as you likely do not meet the actual definition of a contractor.

Hahahaha, wow aren't you helpful :facepalm: I'm not interested in your personal vendetta about people trying to see what they can and cannot claim. For the record, I've always paid my taxes in full and have never claimed anything, ever! So far it looks like I can claim my liability insurance policy and a portion of my cell bill. Better then nothing :D


Bonus points to Z-Fan for good advice on this.

[heavyfuel]

I dunno... My accountant is in his 70's and has almost 40 yrs experience and he's pretty adamant that $350 Helly Hansen polar coveralls and works boots, gloves etc. can easily be written off...

[AndyL]

Most of it falls under PPE if you're working construction...

But like I said - if you talk to canadian linen or one of the other uniform companies - it's surprising the range of clothes they're able to lease you :) The catalog I have sitting here even has tuxedo's, along with normal buisness wear, and pretty much all the carhartt / hellyhansen stuff... And when it's done through a uniform service, our friends at CRA really can't object...

[Hallowed_point]

Originally posted by AndyL
Most of it falls under PPE if you're working construction...

But like I said - if you talk to canadian linen or one of the other uniform companies - it's surprising the range of clothes they're able to lease you :) The catalog I have sitting here even has tuxedo's, along with normal buisness wear, and pretty much all the carhartt / hellyhansen stuff... And when it's done through a uniform service, our friends at CRA really can't object...

This is good Andy, I will have to look into this!! :clap:

[Sugarphreak]

...

[Hallowed_point]

Well I'm not planning on going crazy and trying to write much off. I'd really be no further ahead if they decide to reassess me down the road and I end up having to pay the amount exempted + interest. So looks like the general consensus is that it is really not worth the risk vs the potential of being put through the microscope of the CRA. Fair enough, from now on I'm buying work clothes from Winners to save some money.

*And/or Value Village :poosie:

[Z_Fan]

Haha, Awesome!

[Sugarphreak]

...

[AndyL]

Originally posted by Sugarphreak


haha, that is funny. I had no idea you could lease cloths!

I had this same discussion with an accountant recently; she put me onto it - because your buying a service, with a monthly lease; on an invoice that usually says "UNIFORM" right on it... CRA can't really dispute it...

Catalogs I got so far have everything from khakis and dress shirts, suits, khakis & shirts, the usual work wear... You pay them to launder & maintain - cost really isn't too bad, but knowing you're 100% covered with CRA is golden...

[Maxt]

My accountant has never had an issue with writing off clothes, as long as it makes sense. Work boots, no problem, jeans and shirts as a uniform, no problem. I had to buy a suit as it looked like I was going to have to take a former customer to court, no problem there either. I was allowed to even write off my helmet as I needed it for track testing.