Getting the Most Out of Your Deductions.
Ever wonder how you can get the most out of your deductions? Would you like to make sure that you’re making the right decisions to be in the best tax situation possible? You’re not alone and we are here to help.
We’ve put together a short, handy guide below, with actions that can be taken at both an individual and business level to ensure you get the most out of your deductions. Read on to learn more and take the first steps to that peace of mind.
First things first.
Keep proper records. Say it with us now… Records, records, records!
The number one thing you should be doing, in general, is keeping track of all your expenses, transactions, assets…everything.
It doesn’t have to be a hassle or time-consuming either. Getting into the habit of recording transactions or expenses as they take place, will make your life easier in the long run. For this, we recommend using Hubdoc to document, record and track.
Simply put, this is the best way to maximize deductions and save yourself money, at both the individual and business levels. As accountants, we are only able to work with the information that is documented and provided to us to ensure that everything, *and we mean everything*, is properly recorded.
The Business guide.
Recording income & expenses.
So important, we’ve covered it twice. Repetition is key and that goes for forming the habit of recording your business income and expenses.
Maximize your business deductions with maximum records.
To learn more about exactly why it’s important, and the benefits of operating a business through a separate account, we’ve covered the takeaways in our post on Business Accounts.
Tax cuts for hiring.
Getting the right person for the job can have a positive impact on your deductions also. The type of employees you hire offers opportunities to improve your business’s tax outgoings.
For anyone looking to hire apprentices that are registered through the Industry Training Authority BC. The federal and provincial government offers training tax credits to businesses that employ apprentices and there are a few different kinds depending on various factors.
In British Columbia Sole proprietors, partnerships, and corporations who are subject to BC income tax, are all eligible for provincial training tax credits. Your employee is eligible if they work within BC, and in a role that specifically relates to the training program that they are registered to through the ITA (Industry Training Authority BC).
There are different types of credits and the training tax credit your business is able to access depends on the eligible salary or wages of the employee.
You’ll receive basic credit for the first 24 months of non-Red Seal training programs. This is 20% of the eligible salary and wages of up to $4,000.
Completion credit is available for level 3 or 4 of Red Seal and Non-Red Seal training programs. This is on wages paid to the apprentice in the 12 months prior to them completing a level. Completion tax credit for level 3 is on 15% of the eligible salary and wages up to $2,500. Completion tax credit for level 4 is on 15% of the eligible salary and wages up to $3,000.
Enhanced credits are available for the employment of First Nations individuals and people with disabilities in apprenticeship roles. Take a look at the table below for more details on the enhanced credit amounts.
We’ll follow this up with more good news. The federal government offers federal apprenticeship programs for apprentices in the first two years of their contract. However, they must be registered in a federal, provincial, or territorial government program to be eligible.
You could claim back up to $2,000 for each eligible apprentice through the federal scheme.
Government programs are ever-changing and you can find out more about other grants here.
The Individual guide.
It’s worth noting that as an individual there are steps you can take and things to share with your accountant that can make sure you get the most out of your deductions.
Share those life events.
If it’s a big deal to you it’s likely a big deal to your accountant. Life events can have a major impact on your deductions and trigger changes to your taxes. Keeping your accountant up to date on any life events enables them to make sure your returns are in order and get the best deductions for you.
We understand that excitement, chaos, or more life admin comes with a big life event. Often with this, you can forget things along the way. Making a note to check in with your accountant could mean more savings, so really, it’s worth the extra consideration.
Some examples of life events to mention:
- Getting married or becoming common-law partners
- Having children
- Buying your first home
Making life easier.
There are general actions that you can take on a regular basis to make your life easier and get the most out of your deductions. This is our friendly reminder that as obvious as they may seem, they are often looked over or forgotten.
‘Photos or it didn’t happen.’ Now transfer this principle to keeping a record of your receipts. You need proof of purchases and expenditure and so visual documentation of your receipt is necessary. Finally, an excuse to get your phone out at the dinner table that no one can argue with!
Help yourself & be on time.
Procrastination is something that many of us experience as humans. If you don’t make the extra effort when it comes to taxes, you might literally pay the price. If you’re avoiding your taxes, we are here to help and for advice so they don’t need to be as scary or confusing.
Start putting measures in place to help you meet the due dates for filing and paying your taxes. Making notes of dates will help you avoid penalties so you can live a stress-free life and that little bit of work up-front could save you a lot of stress, money, and time.
The bottom line.
Your accountant wants to save you money, that’s the bottom line. If you do what you can to make your life easier and make sure your accountant has everything they need, they’ll get you the best return possible.
For peace of mind and a helping hand to get the most out of your money, get in touch.