As a self-employed person, there are key differences in when and how you should pay your taxes – and knowing those differences can bring some significant tax savings. Here is what you
need to know.
Tax deadlines
• Most Canadians must file their personal tax return by April 30 — yours is due on June 15.
Tax owing on the personal tax return must be paid by the April 30 deadline. If the return is not filed by June 15, interest and penalties will apply.
• Generally, if you qualify as ‘self-employed’ for tax purposes, you are required to pay taxes in instalments based on your reported income in the previous taxation year, CRA will send you a notice with the amounts you have to pay. Instalment payments for 2011 are due March 15, June 15, September 15, and December 15. If you don’t pay by the due dates, you may face instalment interest and penalties.
You can pay by selecting one of three methods:
1. The schedule set out in the instalment payment notice you will receive from CRA.
2. Last year’s tax payable.
3. The estimated tax payable for the current year.
Tax tips
You may qualify for these deductions:
• Home office – if you use your home office as your principal place of business, you may be able to claim a portion of your housing costs including rent (if you are a tenant), mortgage interest, property taxes, utilities and home insurance.
• Capital assets – the furniture and equipment acquired for your business can be written off gradually by claiming the capital cost allowance (CCA) each year.
• Business expenses – claim reasonable expenses related to earning your income.
• Harmonized Sales Tax – if you charge these taxes to your clients/customers and remit them to the Canada Revenue Agency, you’re entitled to HST refund on business purchases.
• Health and/or Dental Insurance Premiums – these may be deductible for you and your family and deducting them as a business expense usually delivers a better tax benefit than claiming them as a medical expense. The reimbursement of medical and dental expenses would still be received tax-free!
For more info call 905-216-2445 or click info@vnaccountingsolutions.com or visit http://www.vnaccountingsolutions.com/