101 Tax Secrets For Canadians – Tim Cestnick (1)

d. Recreational facilities and club dues Sad to say, but a business is not entitled to deduct costs for using or maintaining a recreational facility (for example, golf fees) or club dues when the main purpose of the club is to provide dining, recreational, or sporting facilities. e. Private health services plan Since 1998, self-employed folks have been able to deduct premiums paid for health coverage under a supplementary health plan. To be deductible, your coverage can’t exceed the coverage of your non-related employees. If you don’t have non-related employees or where they represent fewer than half of all employees in your business, you’ll be restricted to deducting premiums of $1,500 for each of yourself, your spouse and children 18 or over in the year, and $750 for each of your minor children.

f. Automobile allowances If you pay kilometre-based allowances to your employees, including yourself, your business in 2006 is restricted to deducting 50 cents on the first 5,000 kilometres driven by each employee, and 44 cents on the excess. These limits are higher in the Yukon, Northwest Territories, and Nunavut (54 cents on the first 5,000 kilometres and 48 cents thereafter). g. Conventions The tax collector will allow you to deduct the costs of attending just two conventions each year that are related to your business.

There are some further restrictions if the convention is held on a cruise ship, or in certain other situations. h. Advertising in certain media You’ll generally have a problem deducting your newspaper, periodical, and broad- cast advertising costs when you’re aiming at a Canadian market but advertise through foreign media. Becoming a Free Agent: Strategies for Self-Employment i. Life insurance premiums If a life insurance policy on your life is paid for by your business, the premiums are not generally deductible.

There’s an exception when the policy is required as collateral on a loan for the business. If you’re not sure about the deductibility of certain business expenses, speak to a tax pro. • Some specific expenses are given special tax treatment. You should be aware of the key ones. • In most cases, the tax rules restrict the deductibility of these expenses.

Winning the Education Savings Game Winning the Estate Planning Game The Tax Freedom Zone Winning the Tax Game Copyright © Tim Cestnick, 2007 All rights reserved. No part of this work covered by the copyrights herein may be reproduced or used in any form or by any means—graphic, electronic or mechanical—without the prior written permission of the publisher. Any request for photocopying, recording, taping or information storage and retrieval systems of any part of this book shall be directed in writing to The Canadian Copyright Licensing Agency (Access Copyright).

For an Access Copyright license, visit www.accesscopyright.ca or call toll free; 1-800-893-5777. Care has been taken to trace ownership of copyright material contained in this text. The publishers will gladly receive any information that will enable them to rectify any reference or credit line in subsequent editions. The information contained in this book is not intended to serve as a replacement for professional financial or other advice.

Any use of the information in this book is at the reader’s discretion. The author and publisher specifically disclaim any and all liability arising directly or indirectly from the use or application of any information contained in this book. A financial or other professional should be consulted regarding your specific situation. Library and Archives Canada Cataloguing in Publication Data Cestnick, Timothy J., 1966- 101 tax secrets for Canadians : smart strategies that can save you thousands. Annual. 2007- Continues: Winning the tax game, ISSN 1490-8468.

ISSN 1912-0222 ISBN-10: 0-470-84046-3 ISBN-13 978-0-470-84046-7 (2007 edition) 1. Tax planning—Canada—Popular works. 2. Income tax—Law and legislation—Canada—Popular works. I. Title. II. Title: One hundred and one tax secrets for Canadians. KE5682.C47 343.7105’205 C2006-906441-5 Production Credits Cover design: Mike Chan Interior layout: Pat Loi Back cover photography: Lorella Zanetti Anniversary logo design: Richard Pacifico Printer: Tri-Graphic Printing Ltd. Printed in Canada 1 2 3 4 5 TRI 10 09 08 07 06 For tax updates, visit www.timcestnick.com Contents Acknowledgments . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii Tax Planning Tip Sheet . .

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This is a short excerpt from the opening of “” by Unknown, quoted for review and introduction purposes. All rights belong to the copyright holders.

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