Bookkeeper

If you own your own business chances are that you use your car for your business. You pick up inventory, or supplies, perhaps you visit clients, or hopefully go to the bank to do deposits. If you use your car for anything like the above examples you can expense a portion of your use to your business.  That said, there is (of course) some rules that apply in order to stay clear and clean with the Canada Revenue Agency.

The first rule and recommendation is that you log your travel. If you want to expense it you must quantify it, and have support for your expenses. Keep a book in the car and log the date, mileage and reason for each trip. This will go a long way in determining the cost related to your car. Also if you ever get audited you can prove the business use of your vehicle.  Keep all your receipts for gas, maintenance, leases etc as they will be needed to calculate costs, and the percentage that can get allocated to your business.

As with everything for a small business, things need to be kept in proportion with the business itself. For example, if you are a hair dresser with a storefront, your mileage will be minimal, as you will more often than not be in your store working, however if you are a real estate agent, your car is your office and your travel will be extreme. Keep it in line with what you do and keep a log of travel and you will be able to take advantage of your vehicle expense.

So you want to claim a meal or entertainment expense that was incurred for the purpose of earning income, there are some rules you need to follow in order to keep the tax man happy when he drops by to audit your business expenses, here are some general rules:

1. Be sure to keep both the detailed receipt issued by the restaurant or establishment showing the details of the expense, along with the credit card slip (if that is your form of payment) showing the total paid including a reasonable tip.
2. Note on the back of the receipt, the names and business addresses of the customers, or persons being entertained, including the relationship and reason for the claim (eg. Joe Smith, 123 Any Street – ABC Corporation – Potential New Client).

It should be noted that there are special rules under certain circumstances, for example while attending a conference, convention or seminar and when the cost of a meal is included in a transportation fee.  It is best to review the Canada Revenue Agency’s IT-518R for specifics on unusual circumstances.

http://www.cra-arc.gc.ca/E/pub/tp/it518r/it518r-e.pdf