Business Expense and Income Tax

[SoNaRWaVe]

before anyone bites my head off, this is complete foreign language to me as i do not understand anything related to business expenses and income tax. i just know how to file my own income tax which is fairly basic and simple.

my wife went to her accountant to do her income taxes this year and it made me go so i need a second opinion.

basically her accountant has listed some expenses since she works from home. it all sounded fine until my wife told me that the accountant said she can't list her computer as an expense because I had paid for it and given it to her as a gift. now the question is, all the expenses the accountant has listed is paid by me in full (electricity, cellphone, rent, and internet). if the CRA was to do an audit on my wife for whatever reason and asked for proof of these expenses, would she be hooped? i am leaning towards the logic of, well if its an expense, that means it should have been paid by my wife (whether in full or a portion of it for business)? or am i just being paranoid and everything the accountant did was fine?

[6793026]

first of all, you can't claim your ENTIRE RENT because it's you home and you use it maybe 10% of it as work so you can only claim 10% of it.

get an accountant and they shall explain it to you better. you can't buy a car lke a lambo and write that off either etc.

[SoNaRWaVe]

That's the thing. It was done BY an accountant. And under the business form, the full amount was used. Not sure if there's a 10% calculation built into that form. But that's not the main question. The main question is if she will be screwed over if CRA required proof of all those expenses since they are paid under my name.
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[6793026]

upon audit, cra may require you to prove how you got that number (expenses), a simple receipt would do normally.

[SoNaRWaVe]

even if those receipts are under my name, and not hers?

[PJ]

First instinct tells me that it gets more complicated... because if the expenses were paid for by you, then thats money that came from your income, not hers.

Double-check with your accountant for your concerns

[Autorice]

with CRA you can never play dumb. just because your accountant filled it out doesn't mean it's their responsibility. you signed it and CRA will go after you. all accountants sign a release form basically releasing them from any prosecution. tell your accountant and don't claim the whole amount of the bills.

[Jas29]

u are supposed to claim a percentage of your rent usually based off of the square footage that she uses for her business.

[tiger_handheld]

Since you are married, you can have a joint utility bill. Taxes for married / common law are prepared on a "family unit" basis, with the goal being to reduce the tax burden on the family not the individual.

Computer, if you have a receipt, give it to the accountant and claim it as a business expense for the % of business use. Does not matter that it was bought on the Mr.'s visa but the Mrs. uses it for her wedding planning biz.

source: I am an accountant that prepares taxes


edit: full amounts are entered into the program and there is a field that asks "personal use portion" - make sure the accountant enters the correct portion. I've seen people enter 10% as the personal use when it should've be 10% business , 90% personal. Clerical error but it will screw you over big time.

[SoNaRWaVe]

i thank you sir, that answers my question nice and clearly. does it make things easier if we switched things to her name ?

[tiger_handheld]

Originally Posted by SoNaRWaVe

i thank you sir, that answers my question nice and clearly. does it make things easier if we switched things to her name ?

nope.