A couple of years ago I went to a seminar presented by two tax auditors from the enforcement division. They had some great advice. There was an open question and answer period and I was shocked at what people were trying to claim. The auditors however seemed to have heard it all before and had a similar answer for every question. You can claim a reasonable amount for the business portion only.
For example if you have home parties in your living room and you decide to give your living room a face lift (new paint, pictures, furniture) can you claim those expenses? Only the business portion. So the auditor would ask how many hours in the year are your parties, lets say a party every month that lasts 2 hours, that's 24 hours. Now how often is your living room used for non-business, personal activities. Let's see the kids are in there every morning for an hour, and me and my spouse are in there for 4 hours every evening. That's 5 hours per day x 365 days = 1825 hours per year. So 24 hours is 1.3% of the total (this is the business-use portion). So if you spent $10,000 on a makeover you can claim $130. But be careful, depending on what your writing off it may be capital cost allowance (CCA) and you will have to claim that $130 over several years. Now you won't get the whole $130 back, that's just your write-off. Depending on your tax bracket and what the claim is you might get say 30% of that amount, or $39 (spread out over 5 years). So is it worth it? Many people are under the misunderstanding that you can write off anything and some people do. But be prepared to explain the write-off to an auditor if you ever get audited and be prepared to pay back the money you should have paid along with interest and possibly a penalty. I don't speak from experience, I speak as someone who never wants to be in that position.
One that I got a good laugh at was a guy who sells custom decks (part-time business) who put a deck on the back of his house and claimed the entire amount. He said it is a display unit that he shows customers. When the auditor asked how often and for how long customers are looking at the deck he said he had a three or four people over the past couple of years! Anyone care to do the math on that one? Let's the business portion was 4 hours in the past 2 years....
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