confused_uk

Hello all

I started working from home last year & I'm sorting out my tax paperwork & wondering what I can put down (if anything) as an expense. I'm guessing internet & cell phone costs & I need them for the job, but how does that work as some of that is personal usage.

Thanks

Aviator

Use a reasonable proportion, that you can justify if audited. Claimed expenses should be supported by receipts, keep them for 7 years in case of an audit.

If you are self employed and have a home office, a proportion of hydro and gas, property tax, proportional (i.e. if 5% of the home square footage is office space, claim 5% of costs). If any purchases are made exclusively for business, most are deductible. Mileage, if you use a vehicle at all. Keep a mileage log.

If you are an employee and incur expenses, in most cases you cannot claim tax deductions and should claim expenses from the employer. If you are an employee of your own incorporated business that works from you home, consult an accountant.

confused_uk

Thanks

I'm currently just self employed working freelance. My office space consists of sitting on the couch with my laptop, maybe it would be a good idea to set up an actual designated office then?

So say I do an average 10hrs a week work what proportion is that. Do you work it out based on there being 168hrs in a week?

If you claim property tax are you also declaring that part of your home is for business use & therefore have to pay a higher property tax rate on that part?

Aviator

Re property tax, your municipality can advise on that. Your insurer home insurer my also want to know.

The hours you work is irrelevant. The basis is a proportional use of the home, e.g. home 2000 sq feet, business use 100sq feet, home office is 5% of the home.

Example, if you figured you use 5% of the home for work, mixed costs would be claimed at 5%. If your hydro bill was $100, you could expense $5 of it against business income.

If you are uncertain what to do, consult an accountant, they could well save you more than their fees. Once home space is being calculated, one needs to be careful not claiming too much, as this could incur CGT when selling the home.

confused_uk

So it looks like I won't be able to claim unless I dedicate a certain percentage of my home to work space.

Thanks for your help Aviator, I'll talk to the accountant.

Lamin

I am self employed and I employed an accountant who appears very good, however I pay $1000 a year for his services (advice to small business etc) I have met him about three times in the last 6 months including gowingbthrough my returns.

I was told that $1000 seems very expensive ------ can anybody comment on that?

Many thanks.

Aviator

It is not the cost that matters, it is the value you get. If the accountant costs $1000 and you get several thousand dollars benefit due to their advice, is that good value? If you don't then it is costing you. Only you know if it is good value.

Try a few others and get an idea what they would charge for the same service.

Aviator

I would not discount the idea of being able to claim some home office expenses. If what you claim is in line with others in the same line of work, it may not get questioned.

A chat with an accountant is in my view well worthwhile.