No matter how thorough Canada’s tax guidelines, they can never answer all the questions.
Sometimes, your life doesn’t neatly fit into any of the boxes set out by the taxman. But what if your query is a little too personal to bring up with your accountant?
Here are seven of the most bizarre questions Canadians have put to tax preparers at H&R Block. Have a read, so you’ll never have to ask:
Generally speaking, you can’t claim the cost of things like your business suits. Clothing isn’t normally considered a business expense. However, performers may be able to claim costumes used exclusively for work.
And it’s not just clothing. A rap singer may be able to claim the cost of getting dreadlocks, according to Amanda Mills of Toronto-based Artbooks, an accounting firm that specializes in assisting freelancers working in the arts.
There’s no question that baby diapers can take a sizable bite out of new parents’ finances. Unfortunately, though, they can’t take a load off of mom and dad’s tax bill.
It may seem unfair, but baby diapers are a personal expense. That doesn’t mean the taxman is implying they’re a discretionary expense. It simply means the government isn’t prepared to give you a tax break on them. Afterall, if the cost of all necessities of life was deductible, there wouldn’t be much left to tax.
According to H&R Block, the answer here is “divorced.”
“Unless you have a child together, you have to live together for 12 months to be considered common law,” H&R Block Canada tax expert Valorie Elgar told Global News via email.
Usually, you can’t claim legal expenses to defend yourself against criminal charges. However, if the charges are tied to your business activity, you may be able to deduct them from your business income.
“Canadians are always surprised to learn that an illegal business must pay tax on its income,” reads the website from Vaughan, Ont.-based tax law firm Barrett Tax Law. But that’s how things work in Canada.
“If a taxpayer is caught committing a criminal act, they will obviously be brought before the courts on a criminal matter. What taxpayers do not realize is that once the criminal portion is finished, a whole new tax portion begins,” according to the law firm.
Be it pot, drugs or prostitution, if you made money on it, you owe money to the Canada Revenue Agency.
But taxpayers making money illegally are also able to claim business expenses.
“If the CRA is claiming that an illegal business must pay its fair share of taxes, then it is reasonably allowed to deduct all of the costs it incurred to make that illegal money,” according to Barrett Tax Law.
Living creatures cannot be claimed in your tax return. However, you may be able to claim the expenses such as food and shelter for pets or animals you rely on to earn a living.
As with diapers, tampons and sanitary pads are a personal expense and cannot be claimed on your tax return.
However, there are plenty of legitimate medical costs you can use to help reduce your taxes. If you incurred the expenses during the tax year and have kept the receipts, you can claim anything from an artificial limb to an air conditioner, if you can prove it’s medically required. For a full list of eligible expenses you can claim on your federal return, see here.
As long as you and you partner didn’t break up, your relationship status won’t change.
However, if your spouse is in jail, you won’t be able to claim him or her on your tax return as a dependent.