Affordable Bookkeeping for Startups

Car insurance is claimable only for the business or employment use of a vehicle, never for personal driving. Keep a log of business kilometres and total kilometres for the year, then claim that share of insurance along with fuel, repairs, licence fees and loan interest. Employees need their employer to certify in writing that the vehicle was required for the job. Driving between home and a regular workplace counts as personal use.

Non-taxable means an amount is left out of income, so it does not add to your tax bill and generally does not reduce income-tested benefits. Examples include TFSA withdrawals, gifts and inheritances, lottery winnings and life insurance death benefits. Some amounts are non-taxable yet still have to be reported or tracked, such as a principal residence sale. When you are unsure, treat a receipt as taxable until a specific rule exempts it, and check the CRA's guidance.

No. Interest and late-payment charges on an overdue account are not payment for a separate supply, so no GST/HST is added, even though the original invoice carried tax. A charge that is really payment for something you actually supply, such as a re-delivery, a restocking service or an administrative service, is taxable on its own terms. Where the amount is purely a penalty for paying late, bill it without tax.

No. Line 101 reports total sales and other revenue for the reporting period, excluding the GST/HST you charged. The tax collected and collectible goes on its own line further down the return. Use the same basis as your accounting records, and expect the CRA to compare line 101 with the revenue reported on your T1 or T2, since an unexplained gap between the two is a common review trigger.

Yes. The employer deducts income tax from severance and from a retiring allowance before paying you. Lump-sum withholding uses flat rates that are often lower than your marginal rate, so a large payout can still leave a balance owing when you file, especially if you also had regular employment income that year. CPP and EI are generally not deducted from a retiring allowance. Set money aside, or contribute to an RRSP if you have room.

You cannot write off the income itself, but you deduct the costs of earning it. Common current expenses are mortgage interest (not principal), property tax, insurance, utilities you pay, condo fees, advertising, property management, and repairs that maintain the property. Improvements that better the property are capital and depreciated instead. Only the rented portion counts where you also live there. Keep invoices for six years from the end of the tax year they relate to.

Unsold inventory is not a deduction. Goods still on hand at year end sit on the balance sheet, and only the cost of what you actually sold reduces income, so buying stock in December does not cut that year's tax. Inventory is generally valued at the lower of cost and fair market value, which can support a writedown when goods lose value or become obsolete. Count it at each year end and keep the working papers.

Yes, property tax is subtracted in getting to net operating income. NOI takes gross rental revenue less vacancy and the operating costs of running the property, including property tax, insurance, utilities, management, and repairs. It stops before mortgage principal and interest, capital expenditures and income tax. NOI is a lending and valuation measure, not a tax figure: taxable rental income also deducts mortgage interest and follows the CRA's rules on current versus capital costs.

Tax break is informal shorthand for anything that lowers your tax: a deduction, a credit, an exemption or a deferral. A deduction reduces the income you are taxed on, so it is worth your marginal rate. A credit reduces the tax itself, and a refundable credit can be paid out even when no tax is owing. A deferral, such as an RRSP contribution or a rollover on incorporating, delays the tax rather than removing it.

Most financial services are exempt from GST/HST, so ordinary bank charges such as monthly account fees, interest and transaction charges carry no tax. Administrative and non-financial services a bank sells, such as safety deposit box rental or certain reports, can be taxable. Check the statement, which shows any GST/HST charged. For a business, exempt fees generate no input tax credit, so they are recorded at full cost.

A refund cheque does not expire, and neither does your right to the money. Ask the CRA to trace and reissue it through My Account or by phone; a stale-dated cheque is replaced rather than written off. Set up direct deposit so it cannot happen again. For a 2025 return filed in 2026, the CRA's target is two weeks for a return filed online on or before the due date and 16 weeks for a non-resident return — longer if the return is selected for review, and one year's refund is paid as a single amount, not instalments.

The choice does not exist here. Every individual files their own return, so the real decision is which return claims what. Charitable donations, medical expenses and several family credits can generally go on either partner's return, and eligible pension income can be split between you. Preparing both returns at the same time lets you test those allocations and pick the combination that gives the lowest total tax for the household rather than for one person.