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  1. #11
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    Again....has anyone out there....ever been AUDITED

  2. #12
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    Quote Originally Posted by sandylynn View Post
    Again....has anyone out there....ever been AUDITED
    Nope, not with my dc anyways.

  3. #13
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    Quote Originally Posted by sandylynn View Post
    Again....has anyone out there....ever been AUDITED
    Yep. I have. When my marital status changed, there was a mixup on their end, not mine but it resulted in a whack of paperwork coming from my lawyer who deal with my husband's passing to CRA. I'm not sure if they took exception it this or if once a certain level of back and forth happens, then they start digging but I ended up being audited that year.

    It's not a big deal as long as your paper work is in order but it's a pain in the butt because its a lot of paperwork.

  4. #14
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    Quote Originally Posted by Inspired by Reggio View Post
    Hmmm - I have read just about every article put out my Revenue Canada for using your business for home childcare and have never come across a 'cap' on how much you can claim for food or vehicle expenses .... it just says you can write off any 'reasonable expense incurred through operation of your business'?
    Agreed - but CRA know what is reasonable for day care's in your area and therefore their definition of reasonable might vary from ours. I know when I've spoken to accountants who specialize in day care provider's returns, they have said that using a $ amount per head is a good way of making sure that the "reasonable" for both parties was somewhat in line. But they were clear - it wasn't a case of x amount times x children = claim, it was more so x amount time x children = reasonable and as long as receipts supported that much had been spent, then it was a safe amount that didn't raise red flags.

    Interesting to see that $10 is being suggested as a reasonable amount (with receipts to prove cost) as here $3.50 is the accepted reasonable amount to use as a guide. I tend to average about $7.00 and have been submitting receipts for the entire expense but have been fulling expecting an audit as the result of it.


    Plus my understanding is that your vehicle expenses are determined by adding up all the cost of your vehicle that year from the gas used, insurance, repairs and maintenance, registration and renewal of your plates and so forth and than determining that your business use was over your personal use by logging your trips for business to track your KM .... so one year if I had 'no' maintenance on my vehicle my write off might only be small but the next year if I had to do $8000 in repairs on it my write off would be that much higher?
    Agreed and this is how I do it too. This year, I had a $1,500 brake job so maintenance will be higher. Last year, I had replacement Winter Tires.


    For example I have peers whose accountants tell them they can write off 50% and up of their shared expenses of their home .... however if you use the CRA's equation for our industry to determine your shared expenses that would mean that you are using 100% of your square footage of your home for business, it would mean you are open at least 12 hours a day and that you are working 365 days a year ... because that is how our equation works and the only way you can get as high as 50% .... if you are writing off MORE than 50% that would mean you are working more than 12 hours a day everyday and so forth?
    Again agreed BUT some people here have two levels to their homes - the main level and a basement. It's common here that the entire basement is used solely for day care. Separate entrances exist, small kitchen area, bathroom, bedroom for cribs and then the general day care area.

    In these instances, where it is wholly a day care space and not used by the family, then it really is 50% of the allowable expenses because it's 50% of the square footage and the 12 hours a day or 5 days out of 7 don't apply.

    If someone was really using 100% of their house for day care and outside of business hours it was all used by the family (i.e. no dedicated day care rooms), then 100% of sq footage with the 12 hours a day and 5 days out of 7 calculates as being 35% business use (due to the 24 hours on Sat and Sun being family use).

    Even then, it's unlikely 100% of the house is really used, unless carer's are shoving kiddies in their on-suites, using every single bedroom and closet.

    For most it will be 35% or less of their allowable expenses. The very max it will be depends wholly on dedicated day care space.

  5. #15
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    I have a playpen for napping in 3 of the bedrooms....if my son is tripping over a playpen to get to his closet...then I feel justified in using this room as a write-off (even though it's only for 2 hours that the child is napping in the playpen)...the playpen is in his room 24 hrs. a day! Thoughts?

  6. #16
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    ps....I use $3.50 a day per child for 2 snacks and 2 meals....I don't save receipts....for groceries....when I spoke to rev. Canada...the woman said use a set amount (reasonable) for each child....at 3.50 per child....I really think I am being unfair to myself but don't want to invite an audit....at the whole basement.....kitchen ....bathroom....and 3 bedrooms...I use 40% of my home as a write off

  7. #17
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    Sandy...I don think it works like that but maybe? In that case, my whole house, yard, shed and garage are used lol...dc stuff is everywhere!

    I would start saving receipts and claiming more! Mine works out to about $5/child/day which I think is very fair but I have receipts as well.

  8. #18
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    Thanks 5 little monkeys....I will start saving receipts....so how does one justify which room in their home can be used .....

  9. #19
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    For myself, I use my basement for dc only with a bit of time in my laundry room on weekends. I claim 50% because it's exactly half. I do use my upstairs living room in the beginning and end of day so I asked my accountant about that and she said anything over 50% would start to look suspicious and I'd have to use the formula to figure out the %. It would actually be less than half then. So I stick with the 50%....the time we spend upstairs sorta cancels out my use in the laundry room on weekends too!

    When using the formula it's (I think I remember right)....(hours open/hours in day) X (days open/days in week) X (rooms used for dc/total rooms in house). So mine would be (9/24) x (5/7) X (5/10)

    My accountant said for a room to count, it has to be either dc only or spending a good chunk of time in it. I'm not sure if naptime counts...it might!! I would think folding the playpen when not in use might be a better option...even tho it's annoying!! Lol
    Last edited by 5 Little Monkeys; 01-09-2015 at 09:28 AM.

  10. #20
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    Quote Originally Posted by sandylynn View Post
    Thanks 5 little monkeys....I will start saving receipts....so how does one justify which room in their home can be used .....
    I think if you are using your bedrooms then you would include them but as you said you don't use them for the full day care day, just two hours and so the calculations would be different. The formula and examples are on the CRA site.

    With regards to claiming groceries based on $3.50 but not having receipts - you have to have the receipts.

    When I was audited. I had one entry on my spreadsheet which was for $3.00 at the Dollarstore for crafts and I'd lost the receipt. They didn't allow that $3.00 in the audit. No receipt, no claim is their rules. I lucked in as I had missed $4.34 off the business costs elsewhere so they let it go as the net effect was the same-ish
    Last edited by Rachael; 01-09-2015 at 12:16 PM.

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