canadian-money-advisor.ca logo  
taxes

What is a Tax Write-Off?


The term write-off describes reduction in recognized value. For income tax statements, it refers to a reduction of taxable income as recognition of certain expenses required to produce the income.

This article talks about income tax write-offs; common categories of income tax write-offs; and, taxes and benefits in Canada.

What are Income tax Write-offs?


Income tax writes-offs in Canada allow people to deduct a percentage of their work expenses. There are hundreds of write-offs depending on your profession and the things purchased for your business or work during the fiscal year. Business owners generally have more write-offs, but employees, and individuals, have a number of items that they can deduct from their taxes.

What are the Common Categories of Income tax Write-offs?


Business Expenses This includes advertising; company vehicles, maintenance and fuel costs; business start-up expenditures; licensing; subscriptions, delivery charges; utilities; and, travel. You can also write off employee wages and benefits; rentals; property taxes; supplies and equipment; and, representation.
Student Expenses Students can avail of numerous deductions such as relocation and moving; airplane tickets and car rentals; meals and lodging; tuition fees; textbooks; student association fees; and, medical care. Students may also claim $400 of educational expenses for every month they were in university full-time or $120 per month for part-time. Student loans are non-taxable and students can claim a tax credit on any interest incurred on loans. If a student received a research grant, any expenses accumulated while completing the research can be deducted. In Canada, since 2008, all bursaries, scholarships and achievement prizes are non-taxable.
Parent/Child Tax Write-Offs - Parents can claim a tax credit of $2,089 per year per child they have living at home under the age of 18. If your child has a disability the Canadian Child Tax Benefit is increased. Furthermore, any childcare or day care expenses can be claimed on taxes. Parents can also claim up to $500 in registration costs for each child if they are registered in a sport or fitness activity and are under the age of 16. Children with disabilities registered in sports are eligible for an additional $500. Tuition or private schooling costs can also be deducted. Recreational activities, such as ballet or camp, can be written off if the fees were paid while the parent was in school or working.
Personal Write-Offs - There are a number of tax breaks for various personal expenses, according to Revenue Canada. Starting in 2009, homeowners can claim a tax credit for fixing up, repairing or renovating their home. The credit is 15% of work done over $1,000. First-time homebuyers can claim a personal amount of $5,000 when qualifying to buy their first home. Medical expenses can be written-off.

What are Taxes and Benefits?


The Federal Government of Canada states that for each pay cheque that you receive, a part of your earnings will be deducted to pay taxes. Once you find a job, it is important to understand how payroll deductions work in Canada. On each pay cheque, your employer will deduct a small amount of your salary to pay for things like Income tax, Canada Pension Plan, Employment Insurance, and possibly other taxable benefits such as life insurance, medical plan, dental plan or private pension plan. All Canadian residents who are old enough to work must file income tax returns annually. If you are working for an employer, a percentage of your pay cheque will be deducted and sent to the federal, provincial and territorial governments. At the end of the year, you will be given a refund for over-payments.

Importance of Tax Write-Offs


All citizens are entitled to tax write-offs. This is one of the so-called tax benefits or privileges that citizens of this country enjoy. Hence, it is essential to know all the circumstances surrounding this taxes and tax write-offs.

References


wikipedia.org
ehow.com
workingincanada.gc.ca

  • Related Articles
  • Category
      taxes
Add Your Comments:
Fields with * are required
Your Comment Below:
 
Name*
 
Email*
 
Website
 
Code*
 
Enter Above Code
 
Note: Comments are moderated - Spam will be deleted
 

HOME | Contact | Disclaimer | About Us | Faqs | Discussion |