Disclaimer: This response should not be considered to be a comprehensive solution and is based solely on the information provided to us, and consequently CanadaOne and Julie King cannot warrant the effectiveness of any solutions presented in this response.
Scott asked:
I am a pharmacist from Newfoundland. I work 40 hours a week as a hospital pharmacist. I also work approximately 15 hrs per week at 3 different local community pharmacies in my area.
When I submit my taxes, I submit for the extra hrs worked (ie. 15 hrs at the retail pharmacies) as self employment. This was recently challenged by Revenue Canada and I had to take them to court. I was successful in court, though, and the court ruled I was eligible to claim self employment for the hours I work outside the hospital.
My question though is what exactly can I claim? Right now I am only claiming my vehicle expenses for the drive from my house to the retail pharmacies. Is there more I could be claiming? Meals? Office in my house? Anything else?
There is also work available at a retail pharmacy 300 kms away. Can I claim all those kms if I choose to work this far away?
Julie King answered:
Having started more than one business, I understand how challenging the money side of things can be. Not only can you claim expenses related to your self-employment income, but you'll also need to collect necessary taxes and keep proper records. For example, your self-employment income may reach the point where you need to collect GST/HST.
Fortunately, there are a number of good resources that can help. Here are some suggestions
- Do some research so that you understand the basics, and once you have a good list of questions consult with an accountant that specializes in the small business sector.
- Have the accountant and/or a bookkeeper help you set-up computerized books using a software program like Simply Accounting or Quickbooks. Smaller businesses often use simpler programs at first, such as the Quicken product for home businesses.
- If this is new to you, put in the time to learn the differences between capital assets, such as a car or computer, and deductible expenses like the monthly service charge for banking services. This will help you make smart purchase and financing decisions.
- Since you're doing a lot of travelling, you'll want to be very careful about claims related to car expenses. The accountant can advise you in this area.
As a starting point, Canada Customs and Revenue Agency has a useful guide for small business owners with a section on expenses. You'll find it online at:
www.ccra-adrc.gc.ca/E/pub/tg/rc4070eq/rc4070eq-01.html
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