Avoiding the Auto Expense Audit

There are nearly 1.2 small businesses in Canada along with many more individuals who are in the GIG economy, or earning income through contract or freelance work. It’s critical for these clients to report all income and to accurately report any legitimate deductions and expenses – including those related to mixed-use business-use vehicles.  Those expenses are always audit-prone.  Here are some tips to discuss with clients to make sure those auto log details are up-to-date and to prepare them for potential decisions before the year end:  should I buy or lease a new car?

It’s a controversial subject that’s clearly lead to some divided results on our October poll. We asked: “Are government plans to introduce automatic free tax filing for the 12% of adults who don’t file tax returns to get benefits a good idea?” The results are in with 42% saying “yes” and 58% who shared some insightful thoughts and strong opinions with their “no’s”.

Back on July 17, the government announced that it would provide a one-time tax-free payment of $600 to more Canadians with disabilities.  These individuals will finally see payment of that amount beginning this week.  But there are more opportunities that qualified tax practitioners can help with before year end. 

Knowledge Bureau’s Income Tax Estimator, a sophisticated software tool used in teaching our certificate personal tax filing and planning courses, incorporates the most recent changes to tax brackets and known provisions including the calculation of the Canada Recovery Benefits.  We have now calculated the 2021 tax brackets based on CPI figures released last week to enable students and Knowledge Bureau Calculator subscribers to prepare projections for 2021 taxes payable as part of year-end tax planning activities. 

Today, even the smallest business requires timely and reliable information, if it is to succeed and thrive despite the pandemic and the constant threat of future CRA auditing. A new course from Knowledge Bureau, Budgeting & Forecasting for Small Business is designed to teach you how to use the information within bookkeeping systems to assist business owners to make sound business decisions throughout the year: an essential service during these times.

This is your last week to take advantage of early-bird tuition rates to attend the November 18 Virtual CE Summit, and we’ve introduced a second flex study option for those unable to attend the live event. But special tuition rates still apply until the deadline, with whichever study option you choose..so be sure to act by October 31 and save $100.

In 2020, a large number of taxpayers are working from home due to workplace restrictions imposed by governments due to the COVID-19 pandemic. The current requirements for claiming home office expenses are very strict, and the reporting is rather cumbersome.  But CRA is working on a solution.