@#&*%~$ taxes! Be that as it may, filing your income taxes is still a necessary part of the residential and industrial painting industry.

For basic yet prudent tax advice, we turned to our friends at Truster Zweig LLP (www.trusterzweig.com) a Richmond Hill, Ont.-based chartered professional accountants’ firm.

“Assuming that the contractor is a self-employed individual,” explains Garror Sands CPA, CA, LCA, and partner at Truster Zweig, “as a business individual he or she will be required to keep many of the same documents that a corporation is required to keep as they pertain to Receipts and Disbursements.

“These include banking documents and all disbursements that you will need for your tax return. The CRA (Canada Revenue Agency) can ask for proof of all expenditures that you are claiming – so make sure you have them.”

Sands also notes that if you are earning more than $30,000 in the tax year, you will be required to register for HST (Harmonized Sales Tax).

Since painting contractors will more than likely be operating out of their own home, there are a number of write-offs that can be filed, Sands says. “The home office expenses would include the cost to operate his or her business, such as the cost of maintaining a website/internet, telephone usage, accounting fees and office supplies. As well, if certain costs include a personal portion, such as the home internet, then the personal portion would have to be excluded.”

In other words, to claim these items, they must be separate business-related costs and not combined with personal family costs.

Sands notes that the contractor would be allowed to expense the actual business use of the vehicle’s operating cost, including wear-and-tear of the vehicle, or a percentage of the leased vehicle.

“Other purchases may be categorized as supplies, such as paint brushes, rollers, plastic, tape, etc., because they are generally consumed within the current year, and as such, can be expensed,” he relates. “Other expenses that are under $500 can be expensed as well.”

For items over $500 that have a longer working life, such as a spray gun or ladder, it can be deducted for multiple years, but at a depreciating value. Keep in mind, that most expenditures to operate a business can be used in your tax deductions, including membership dues or attendance at specific conventions.

Because the past year has been a difficult one due to Covid-19 health restrictions, not all of us have been able to work. If you have not done so already, apply for financial aid via the Canada Recovery Benefit available from the CRA.

As for the actual filing date of your taxes, a self-employed contractor must do so no later than June 15 of each year. But, as Sands sums up: “However, note that any taxes that may be owing are due no later than April 30 of each year. As such, you may be required to estimate the taxes owing and pay these in advance to avoid any interest on payment in taxes.”

Because taxes are a complex aspect of being in business, for the best outcome consider employing a tax professional for assistance.

Sharing is caring!

Bragging

Floor Specialty

Dave Wenners has been a residential and light commercial painter since 1988, but lately he’s been bragging about a tighter…

28 Nov 2018 Bragging Erin Burke No comments

Read more