Self-employed business:
CRA reference:
https://solidtax.ca/wp-content/uploads/2022/09/t4002-21e-Self-employed.pdf
Do I have to pay instalment requests from the CRA?
Yes, you do have to pay them if you do not want to incur any unnecessary interest for not paying the instalments. Typically, instalments are only required if your previous taxes owing is $3,000 or more in a single fiscal year, and based on how much you owe, the CRA calculate your instalment payments on the request letter issued. Instalments are typically due quarterly (March 15, June 15, September 15 and December 15).
Do I have to charge and file HST on my sales?
Typically, you do NOT need to charge or file for HST if your gross business income is less than $30,000 in a single fiscal year. The gross business income is defined as your total income before you deduct any expenses, including those related to the goods sold. However, in certain situations, the business may choose to register for an GST/HST number even if their gross business income is less than $30,000. In this case, you MUST charge and file HST. In other cases, industries such as dentistry and daycare services DO NOT need to register for an HST/GST number because this industry is considered HST/GST exempt.
Self-employed business: Can I claim my car for my business?
Yes, but you can only claim it if you have used the car with the intent to earn business income. Most of the time, you can only claim a reasonable percentage of your car that you use to earn business income. Furthermore, you cannot deduct the full value of the car in a single tax year, but instead you claim the depreciation year by year as a business expense. The depreciation expense of a car is determined by the class the car is in, for instance if it’s a passenger vehicle, you can claim 30% of the business portion of your car value per year. This is called CCA – Capital Cost Allowance.
Do business losses reduce my income taxes?
Yes and no, depending on the situation. If you have claimed any CCA on your taxes, your NET BUSINESS INCOME (after expenses) cannot go below 0. In other words, CCA claims CANNOT create a loss. If you do not claim any CCA on your business, then your NET BUSINESS INCOME can fall below 0, meaning that the negative net business income can be a deduction off your total income. Please note that claiming a negative net business income consecutively over the years will increase the chances of an audit.
