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Self Employed

What Can I Claim for Being Self-Employed?

Marin Perez
March 11, 2019
Working on a tablet at a restaurant

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Self-employed workers file taxes differently than employees and corporations do. Here's what you need to know about filing taxes, as well as what you can claim being self-employed.  

Self-employed and small business - perks and services

The Small Business Job Credit may allow you to claim a refund for Employment Insurance (EI) premiums paid in 2015 and 2016. The credit applies if EI premiums paid in 2015 and/or 2016 amounted to $15,000 or less. Finance Canada estimates that 90% of EI-paying businesses are eligible.

Deadline for getting the Small Business Job Credit

Receipt of your original 2015 T4 return or any amended, cancelled or additional T4 slips for 2015 has to happen on or after January 1, 2019. Otherwise, the credit is not allowed. Similarly, no EI premium reduction is allowed if receipt of your original 2016 T4 return or any amended, cancelled or additional T4 slips for 2016 arrives on or after January 1, 2020.

CCA deduction

You may also qualify for a new capital cost allowance on equipment and machinery. The CCA Class 53 may allow you to deduct 50 percent of equipment on an accelerated basis. This may apply to electric vehicle charging stations and other equipment meant for manufacturing and processing goods for sale or lease.  You can file documents or access their GST/HST, payroll, or other information by setting up a My Business Account with the CRA.

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How to claim business income and expenses

Use Form T2125 to report business income and expenses. Business expenses are amounts spent to help you earn income. You must have documentation of any expense claims. This includes invoices, receipts or agreement of purchase and sale. You can also claim other expenses like the use of a motor vehicle but be sure to have proper documentation.

What are some deductible business expenses?

Deductible business operating expenses may include:

     
  • Prepaid expenses
    •  
  • Accounting and legal fees
    •  
  • Advertising expenses: Advertising expenses are 100 percent deductible if ads constitute 20% or less of the publication's content. The deductible is 50% if the publication's ad content is more than 20%.
    •  
  • Interest and bank fees - interest charged on business loans is deductible.

If you use a motor vehicle for work, be sure to determine exactly how much you use it for business purposes. Deductible motor vehicle expenses may include:

     
  • Licence and registration fees
    •  
  • Fuel
    •  
  • Insurance
    •  
  • Interest on car loans
    •  
  • Leases
    •  
  • Repairs and maintenance.

As with any other business expense, support motor vehicle expenses with receipts. The CRA strongly recommends a full logbook showing details of use for every vehicle used to earn business income. Record odometer readings at the beginning and end of each fiscal period. Include the date, destination, purpose, and mileage for every business trip.

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MileIQ: Mileage Tracker & Log

MileIQ Inc.

GET — On the App Store

View
MileIQPricing
Open MenuClose Menu

Self-employed workers file taxes differently than employees and corporations do. Here's what you need to know about filing taxes, as well as what you can claim being self-employed.  

Self-employed and small business - perks and services

The Small Business Job Credit may allow you to claim a refund for Employment Insurance (EI) premiums paid in 2015 and 2016. The credit applies if EI premiums paid in 2015 and/or 2016 amounted to $15,000 or less. Finance Canada estimates that 90% of EI-paying businesses are eligible.

Deadline for getting the Small Business Job Credit

Receipt of your original 2015 T4 return or any amended, cancelled or additional T4 slips for 2015 has to happen on or after January 1, 2019. Otherwise, the credit is not allowed. Similarly, no EI premium reduction is allowed if receipt of your original 2016 T4 return or any amended, cancelled or additional T4 slips for 2016 arrives on or after January 1, 2020.

CCA deduction

You may also qualify for a new capital cost allowance on equipment and machinery. The CCA Class 53 may allow you to deduct 50 percent of equipment on an accelerated basis. This may apply to electric vehicle charging stations and other equipment meant for manufacturing and processing goods for sale or lease.  You can file documents or access their GST/HST, payroll, or other information by setting up a My Business Account with the CRA.

How to claim business income and expenses

Use Form T2125 to report business income and expenses. Business expenses are amounts spent to help you earn income. You must have documentation of any expense claims. This includes invoices, receipts or agreement of purchase and sale. You can also claim other expenses like the use of a motor vehicle but be sure to have proper documentation.

What are some deductible business expenses?

Deductible business operating expenses may include:

     
  • Prepaid expenses
    •  
  • Accounting and legal fees
    •  
  • Advertising expenses: Advertising expenses are 100 percent deductible if ads constitute 20% or less of the publication's content. The deductible is 50% if the publication's ad content is more than 20%.
    •  
  • Interest and bank fees - interest charged on business loans is deductible.

If you use a motor vehicle for work, be sure to determine exactly how much you use it for business purposes. Deductible motor vehicle expenses may include:

     
  • Licence and registration fees
    •  
  • Fuel
    •  
  • Insurance
    •  
  • Interest on car loans
    •  
  • Leases
    •  
  • Repairs and maintenance.

As with any other business expense, support motor vehicle expenses with receipts. The CRA strongly recommends a full logbook showing details of use for every vehicle used to earn business income. Record odometer readings at the beginning and end of each fiscal period. Include the date, destination, purpose, and mileage for every business trip.

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