Tax tricks and personal business

[Supa Dexta]

I'm thinking of going consulting this winter, so I thought it would be cool to have a thread where we could throw ideas back and forth for using the system legally, but to your advantage in terms of taxes and personal gain.. Such things as writing off all of your business expenses from computers to vehicles, fuel..etc.. How far can it be taken? Insurance coverage, oil changes and things like that?

I've also been told of something about a "daily living allowance" you give yourself, out of your daily rate. That you can then keep tax free, if you keep it under the gov't allowed limit. Which basically will be the same as making 2x as much as en employee. Example, if you have a total set aside of 3k a month for this allowance, to get that 3k as an employee you would have to make 6k originally after their deductions..etc.

This will be my first experience being a non employee, so anybody that can give me some tips and tricks would be appreciated. I literally just got out of the meeting an hour ago.. So I'm realllll new to this..

Also, I will be needing to buy a new truck, I plan to go talk to the bank, but basically how do you get loans up front for the initial start up? Of getting the truck itself, and then getting it geared up..And so on.. Just explain the situation that you have guaranteed work lined up, but in order to do so you have to get certain things in place.

[Whiley]

i found they wont ever let you write off 100% of your vehicle & use, even less if its an extended cab truck (for some strange reason?), even with receipts and log proving 100% use of truck for work, in they allowed only 90% write off
CCA is another good way to write off items, if you plan on doing this long term
anything you can pay out of the business before paying yourself helps, depending on how you decide to structure it
are you going sole proprietorship?

[tm88]

Very interesting...ill be logging into this thread.

I could be wrong however leasing a vehicle is better when it comes to writing it off. Correct me if i am wrong???

[Supa Dexta]

That sucks, cause I will need an ext cab, and I would go full 4 doors if I'm going to need ext cab anyways. I have no idea what I'm doing yet, I have to talk to a few guys already doing it.. Basically I will be working for a large oil company, They will hire me on as a consultant, but then I'm responsible for my own truck/insurance, taxes..etc. Basically I'm going this route so I can take the summers off and be in NS then.

[DJ_NAV]

you might want to incorporate... lots of advantages....

[Mckenzie]

Automobile Expenses

-maximum lease pmt. 800 / mth plus gst
-max. interest deducted on purchased vehicle = $300 / mth
-deductible expenses = operating expenses, interest, lease payment and CCA as a proportion of the kms used for business purposes

Keep in mind the different definitions of MOTOR or PASSENGER vehicles per this website. You will want to ensure that your extended cab is used to transport goods, equipment, or passengers 90% of the time or more. That way, there is no maximum capital cost of you purchase it. If it is only for you, and not used for those purposes, it is a passnger vehicle and therefore has a maxiumum capital cost of $30k (even though it may cost you $45k).

Likely better off leasing the truck to a maximum amount of $840 including tax for a full write off each month.




http://www.cra-arc.gc.ca/tx/ndvdls/t...fntns-eng.html

[Supa Dexta]

I should be clear there, since it will be a work truck, used for transporting work equipment to site, and will remain on site with me the entire time out there, which is normally a month or so at a time. I won't be hauling travel trailers and whatnot..

[Mckenzie]

Originally posted by Supa Dexta
I should be clear there, since it will be a work truck, used for transporting work equipment to site, and will remain on site with me the entire time out there, which is normally a month or so at a time. I won't be hauling travel trailers and whatnot..

Then you should be fine as the requirement is hauling people / equipment.

As long as you keep a log of your business / personal KMs (one of most irritating things ever) you should be fine if you want to purchase the vehicle (but I still recommend leasing- you only get 50% of the CCA in the year of acquisition and can be taxed on eventual sale if the proceeds > UCC balance per tax).

[Supa Dexta]

Thats the great thing. I'm required to keep a milage log anyways to get paid my milage. Other then that, The truck sits there for a month hardly getting used, making money itself from my daily truck allowance.. You actually make money off of the truck, plus get the tax breaks.

[Mike w]

is there a website you can goto that tells you what you can and cant write off?/ tax deductable?

[Supa Dexta]

Likely is to some extent, But what I was hoping to get from this thread is to find someone who has been doing it for yrs that knows the angles to work.. If you use it for your business it's fair game, within reason, from a pen to a computers, lunches.. etc

[Mckenzie]

Originally posted by Supa Dexta
Thats the great thing. I'm required to keep a milage log anyways to get paid my milage. Other then that, The truck sits there for a month hardly getting used, making money itself from my daily truck allowance.. You actually make money off of the truck, plus get the tax breaks.

Well you have just opened a new can of worms. Mileage would indicate that you are an employee.

If you include the allowance into income, you can deduct the amount of business related expenses above the allowance from income.

[Mckenzie]

And lunches are not deductible. Meals and entertainment are deductible at 50% of the amount, but you cannot write off your lunch.

Pens are deductible. And so is anything else for that matter- just dont get caught.

[snowboard]

pay yourself through dividends if its just you and your incorporated.
no CPP and all that other crap.
talk to your accountant about it, i suck and cnt explain it fully

[Mckenzie]

Well there seems to be more to the picture here. If you incorporated and are paid a mileage allowance, this would likely be considered business income- it does work that way.

If you are an employee, mileage allowance is TAX FREE.


You need to figure out the details of your work with this company first (employee / contractor), then you can worry about the other issues.

[Supa Dexta]

No it's just part of being a consultant. You have to use your own truck, but driving to the job they give you say ~1$ a km.

Plus when the truck is sitting there day after day you are given 75$ a day.

Employee's who use their own truck also get milage (half the amount or something) And no 75$ a day, but they do get 1100/month I think.

Just different set ups for the situation.

[Whiley]

my advise, you should call their accounting and ask a few questions, in my experience they can usually be flexible to how you need to set things up, then when you've determined all that, it can be written into your terms of contract
or first ask your hiring contact, and say you'd like to contact accounting for some questions, so you can set up things properly
i have heard of some instances where in personal audit, contractors have found themselves being considered employees, and that partially comes back against the o&g company also
thats my advise
incorporation is a good thing also, a certain amount of dividends paid to yourself, the rest paid & expensed under the business, that way your personal income is lowest tax % possible, and the rest is taxed through the company, which is a lower rate also (vs higher personal tax brackets)
if your being paid a daily for truck + mileage, you do have to declare both, but i think preferably you should include those both in your invoicing
if you set up a home office for the business, then you can write of a percentage of the home items also, rent/mortgage, utilities, phone
ask some of your co-workers, they are already set up with someone who does that type of accounting
there are usually good accounting companies outside of calgary that deal with contractors and farm business' and they will be able to do a better job for you, since they do that 'type' of accounting & bookwork all the time
if you travel through strathmore or med-hat for work often, then check those places out for some

[Whiley]

thats all true, the CCA gave me explanation that personal items & luggage are not included as goods & equipment
that was their explanation for disallowing the % of vehicle that the extended cab occupies
if your hauling personnel, there were some other stipulations & restrictions on that too, but i cant remember them now
if your working half the year, then leasing or renting is likely your better option, as was suggested below
if memory serves, renting write-off (through your buisness' name) can be up to 100%, but i don't know the conditions for that

Originally posted by Mckenzie
Automobile Expenses

-maximum lease pmt. 800 / mth plus gst
-max. interest deducted on purchased vehicle = $300 / mth
-deductible expenses = operating expenses, interest, lease payment and CCA as a proportion of the kms used for business purposes

Keep in mind the different definitions of MOTOR or PASSENGER vehicles per this website. You will want to ensure that your extended cab is used to transport goods, equipment, or passengers 90% of the time or more. That way, there is no maximum capital cost of you purchase it. If it is only for you, and not used for those purposes, it is a passnger vehicle and therefore has a maxiumum capital cost of $30k (even though it may cost you $45k).

Likely better off leasing the truck to a maximum amount of $840 including tax for a full write off each month.




http://www.cra-arc.gc.ca/tx/ndvdls/t...fntns-eng.html

[Supa Dexta]

I may have an angle on that as well. If I need to transport computer systems that have to be kept warm and secure in the cab, the ext cab is the only safe option for that.

[syscal]

If you incorporate, look into Employee Profit Sharing for paying yourself. You'll need both an accountant and lawyer to make this happen but it's worth it.