By Steve Payne
Fixing for a refund on your tax return
As a skilled tradesperson, you build the houses where families live, skyscrapers where people work, and the roads and bridges that get everyone where they need to go. The work that you do benefits all Canadians. But did you know the Canada Revenue Agency (CRA) wants you to benefit too when you do your taxes?
No matter what your trade is, you need to make sure you have the right tools for the job.
If you bought new ones for work this year, you may be able to claim the tradesperson’s tools deduction, a deduction of up to $500. To claim the deduction, you will need your employer to certify the tools were bought by you, for you, to be used directly in your work. You may also be able to get a rebate on the goods and services tax/harmonized sales tax (GST/HST) you paid. For more information on deducting the cost of eligible tools, go to cra.gc.ca/trades.
Keep your receipts
Are you part of a trade union?
If you pay dues for your membership, hold on to your receipt. You may be able to deduct the amount paid on your tax return, including any GST/HST you paid as part of your dues. For more information, go to cra.gc.ca and search for “Line 212 – Annual union, professional, or like dues.”
When someone questions “Who’s the boss?” you take pride in responding, because well… it’s you!
If you’re self-employed, you may be able to deduct other reasonable expenses you paid to earn income, such as vehicle costs, supplies needed to complete a job, and office space expenses. Have you converted part of your garage from a storage room into a workspace for your business? When you use part of your home for business, you may be able to deduct a portion of your maintenance costs such as heat, home insurance, electricity, cleaning materials, and more. To find out more, go to cra.gc.ca/selfemployed and select “Report business or professional income and expenses.”
Registering for a GST/HST account
No one has to tell you that the demand for skilled tradespersons never seems to slow down. You recognize that every day. As your project schedule starts filling up, it might be time to consider registering for a GST/HST account. Generally, you are required to register for the GST/HST once your business income exceeds $30,000 in four consecutive calendar quarters. Even if you aren’t required to, registering could let you claim input tax credits on the GST/HST you paid on your business purchases and expenses. This is an important benefit of owning a business and could put more money in your pocket to re-invest for the future. For more information, go to cra.gc.ca/gsthst. If your business is located in Quebec, go to revenuquebec.ca.
Helping you help others
You learned (almost) everything you know about your trade spending countless hours as an apprentice. Now you want to pass that knowledge on to the next generation of tradespersons. If you hire a qualified apprentice working in an approved Red Seal trade, you may be able to claim the apprenticeship job creation tax credit. For each eligible apprentice, you can claim $2,000 or 10% of the eligible apprentice’s salary and wages payable in the year, whichever is less. Don’t need to use the whole credit amount this year? Carry the unused amount back 3 years or forward up to 20 years! For more information on the apprenticeship job creation tax credit and other investment tax credits, go to cra.gc.ca/smallbusiness and select “Investment tax credit.”
Completing your tax return
Tax returns for most Canadians are due on April 30, 2017. However, since this date is a Sunday, the CRA will consider your return as filed on time and your payment to be made on time if it receives your submission or it is postmarked the next business day. Self-employed individuals and their spouses or common-law partners have until June 15, 2017, to file their returns. But if they have a balance owing to the CRA, the amount is still due no later than April 30, 2017.
This year, you can file online as early as February 20, 2017. Last year, more than 84% of individuals filed their returns online. To file your personal return online, you can prepare it using certified tax preparation software or a certified web application. The CRA has a list of certified tax preparation software on its website, including some that are free. To find out more, go to cra.gc.ca/netfile.
Unfortunately, not every year can be a winning year. If your business is facing cash flow problems, you may be able to pay off your tax debt in more than one payment. You can set up a payment arrangement by making a pre-authorized debit agreement through the CRA’s My Business Account or My Account service or by calling 1-888-863-8657. To learn more about your payment options, go to cra.gc.ca/payments.
Even with all of your training and credentials, it’s still important to be vigilant and not find yourself swayed into participating in the underground economy. If your clients suggest you do a job “under the table,” know that by avoiding taxes, you are putting yourself at risk. If you are caught evading taxes, you could face penalties and jail time, and you could even lose your business. It’s that simple.
Under-the-table deals undermine the integrity of Canada’s tax system and deprive Canadians of funds for vital programs that benefit everyone, including children and seniors. On the other hand, as the boss, if you pay your employees under the table, you are robbing them of the benefits they are eligible for, like employment insurance, Canada Pension Plan payments, and workers’ compensation coverage. For more about the underground economy, go to cra.gc.ca/undergroundeconomy.
If you have ever made a mistake or an omission and would like to correct your tax affairs, you can find more information about the CRA’s Voluntary Disclosures Program at cra.gc.ca/voluntarydisclosures.
You can also stay on top of the latest CRA news and tax tips by following @CanRevAgency on Twitter.
Steve Payne is the editor of Canadian Contractor Magazine [www.canadiancontractor.ca]