Taxes can be daunting, but at least it’s a sure sign of spring! Whether you’re filling out forms online, or on paper, with so many options and boxes it can be confusing as to what you’re eligible to deduct. Check this list to make sure you aren’t missing any opportunities:
1) In this industry, self-employment can mean many different things: renting a chair, providing mobile on-site services, working from home, or owning your own salon. Generally, you can deduct any reasonable business expense you incurred or will have to pay to earn business income, such as chair rental fees or supplies and equipment like hair colour, blow dryers, and scissors. If the salon is in your home, a proportionate amount of your household expenses, such as heating and insurance, can also be deducted. For more information, go to www.cra.gc.ca/selfemployed, and select “Business expenses.”
2) In addition, if your business hires an eligible Red Seal apprentice hairstylist (an apprentice that is qualified to work in Canada through government certification) you may qualify to claim the apprenticeship job creation tax credit. This non-refundable investment tax credit is equal to the lesser of $2,000 or 10% of the eligible apprentice salaries or wages. For more information on the apprenticeship job creation tax credit and other investment tax credits, visit www.cra.gc.ca/smallbusiness and select “Investment tax credit.”
3) You may be able to deduct the cost of supplies you purchased, as long as you used them for work. See www.cra.gc.ca/employmentexpenses for further clarification.
4) As a tradesperson, you may be able to deduct the cost of eligible tools, too! A credit of up to $500 is available to you, provided your employer can verify that you bought were used for work. See www.cra.gc.ca/trades for further information.
5) Check with your employer to see if your tips will be included on your T4 slip. If not, it is up to you to declare them on line 104 of your income tax and benefit return form.
6) Part of owning a salon also means ensuring the proper employee contributions, premiums, and tax amounts are deducted and remitted to the Canada Revenue Agency (CRA), along with your own employer contributions and premiums. You will find more information at www.cra.gc.ca/payroll, by searching the payroll topics alphabetically for “Barbers and hairdressers.” Also take a look at the proposed Small Business Job Credit which helps small businesses by lowering their Employment Insurance (EI) premiums. More information can be found at www.cra.gc.ca
7) We recommend going digital: filing electronically with NETFILE is easy, secure, and lets the CRA process your return much faster. If you’re entitled to a refund, you can enjoy your money in as little as eight business days, by combining online filing with direct deposit—”shear” genius! For a list of software and web service options, including those that are free of charge, go to www.netfile.gc.ca/software
Don’t forget! The deadline to file your personal income tax and benefit return is April 30, 2015. If you, your spouse, or common-law partner is self-employed, the deadline to file is June 15, 2015.