Self-employed taxpayers are their own employers. This means they must take responsibility for making sure that they fulfill their obligations to pay their own taxes, both income taxes and Canada Pension Plan premiums.
If you earned self-employment income from an un-incorporated business you operate yourself or with a partner, you should report it on your T1 general income tax and benefit return. As a self-employed individual, you have until midnight on June 15, 2014 to file your 2013 income tax and benefit return. You were still required to pay any balance owing for 2013 on or before May 5, 2014, regardless of the filing due-date of your return.
Many of the self-employed clients who approach us, even those who have filed their taxes on a timely basis, often express that they feel they may not be taking advantage of every opportunity to minimize their tax burden. Many are not even aware of the various personal and business deductions available to them by virtue of being in business for themselves. Failure to take full advantage of these available deductions will result in self-employed taxpayers paying taxes they could legitimately avoid.
We can help you minimize tax liabilities and increase opportunities if you do the following:
– Keep detailed financial records if you are carrying on a business or engaged in a commercial activity in Canada. The financial records have to provide enough detail to support the amounts of income reported and expenses claimed to determine your tax obligations and entitlements. The best support is original documents.
– Keep your records for at least seven years. If the Canada Revenue Agency contacts you three years from now requesting you to justify various expenses you claimed and deducted today, you will have a clear record on hand to show them.
– Be prepared to account for your income and to show a correlation between your level of income and your lifestyle. You may be asked by the Canada Revenue Agency to prove you did indeed report all income you earned, especially any cash income.
– Keep detailed records to show that your business payments were solely for business purposes and not personal expenses. For meals and entertainment expenses, keep a detailed record of which specific customer or client you were entertaining and what the specific business purpose was.
Also keep in mind that if you have over $30,000 of taxable sales or services, your unincorporated business should be registered for GST/HST. You would be required to remit the GST/HST collected on taxable sales or services in addition to claiming a credit for GST/HST paid on purchases.
Quon and Associates can help you prepare your Canadian individual income tax return (T1) for a self-employed individual which is due June 15, 2014. We can also assist with any applicable GST/HST filing. Call us or visit our website for more information. 403-250-5111