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  1. #1
    Starting to feel at home...
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    Accounting Question - Can you claim new appliances as expenses?

    I have been tackling my own income tax this year (first full year home daycare). It's been tough trying to think of all the things I can claim to try to bring my tax return lower.

    We just bought our new home and bought all new appliances 2 years ago (fridge, stove, dishwasher, washer, dryer). Since I use all these appliances on a daily basis for my daycare (especially the dishwasher, once a day) I was wondering if I can add them to the capital cost allowance section. What are your thoughts?

    I also purchased a new tv a few years ago, which the kids use daily.

    Also, what is the average income tax return for your home daycares???

    After all this work on my own, I am thinking that I am going to take my spreadsheets to an accountant and maybe they could bring my amount owing down a lot (right now I am owing $2,500). Maybe there is something I have missed.
    ~~Proud Mama and Owner/Operator of Cutie Pie Daycare~~

  2. #2
    apples and bananas
    Guest
    wow! $2500? I started about a year ago so my taxes for 2011 included half a year daycare and half a year of me working outside the home. I got a huge refund! I always suggest getting someone to do your taxes for you that know all of the loop holes. I found my accountant through a friend that owns his own business and uses her. There are a lot of these people that are trained and do it out of their homes.

    I'm sorry I can't be any help with the capital cost information. But I did find that the more organized my records were the less work my accountant had to do and the less she charged me.

  3. #3
    Starting to feel at home...
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    Thanks for your reply.

    The reason I am trying it on my own is because I had someone file my taxes last year who made two big mistakes. She was a referral from another home daycare provider. Some of my other friends who have home daycare's go though Accountants but pay a couple hundred dollars for their returns. I'm trying to cut the costs down but maybe I'm going to have to go that route otherwise I'll be paying big time.
    ~~Proud Mama and Owner/Operator of Cutie Pie Daycare~~

  4. #4
    Outgoing
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    I had someone do mine for me and it only cost $120 and that was for both mine and my husbands. His is just a simple return, and mine being a little more work as a business. She did a fantastic job. If your local to her maybe she could help you out. If you want to PM me your location I can let you know where she is and her business name

  5. #5
    Starting to feel at home...
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    On the CRA site, there's a section that talks about what you can include in the capital costs for daycare home businesses: http://www.cra-arc.gc.ca/tx/bsnss/tp.../menu-eng.html
    Hope that helps.

  6. #6
    Euphoric ! Inspired by Reggio's Avatar
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    Sadly my understanding, and I could be wrong I am not an accountant or anything, but if you bought your appliances two years ago because your home was new and you did not have any those were 100% personal expense at the time -so my guess is CRA is likely going to tell you NO you cannot write them off as a capital expense for your daycare even though you now two years later are using them for business purposes ... some might tell you to go ahead and 'try' but in an audit you have to be willing to argue your case and WIN and in this case I am thinking way too grey to risk it!

    When you say 2 years ago I am assuming you bought the appliances in 2010 and opened your daycare in 2011 and started earning income at that point? My understanding is that capital expenses have to be incurred in the year you start earning income for your home business ... so the receipt would have to be for 2011 to even consider writing something like that off in the first place .... you can only carry them over to future business years if you earned business income in the year you incurred the cost in the first place..... so for example I collected A LOT of toys and equipment over the years before choosing to start home childcare - I could not write off those expenses when I opened the daycare - unless I wanted to 'sell' them to the daycare in which case I would have to claim the income personally anyway and pay tax on that income - so what is the point than

    However my understanding is that if in the future they are in need of repair or replacement and you are still doing business with them where the 'wear and tear' can be argued to have been business related due to the increased use than you can write off a % of that under shared use of home - maintenance and repairs on home....based on the equation given to home childcare providers for this which is:

    square footage of entire home / square footage used for business x 24 hours / business hours each day x 365 / number of days business is open = % you can write off.

    So for example .... I use the convection oven in my kitchen A LOT for daycare to quickly heat meals if we have been out on a field trip so when it broke last year I needed to replace it cause while I could technically get by without one personally it impacted the business .... so I wrote off a portion of that expense as business and the rest was 'personal' cause we use it in the evening and weekends even if it is just to pop popcorn.

    Last year our A/C broke in the middle of that heatwave and it cost $350 to repair - I wrote off a portion of that as business expense as well under the repairs and maintenance and so forth.

    ultimately you need to feel that in an audit you can defend that the expense was reasonable need in order to conduct your business !
    Children construct their own intelligence. The adult must provide activities and context, but most of all must be able to listen. Children need proof that adults believe in them. Their three great desires are to be listened to, to understand, and to demonstrate that they are exactly what we expect."
    Loris Malaguzzi

  7. #7
    Starting to feel at home...
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    Great thoughts Reggio. I will just have to take my purchases to an Accountant and see what they say.
    ~~Proud Mama and Owner/Operator of Cutie Pie Daycare~~

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