Dispelling common myths about your taxes

When you own a business, you'll already understand how challenging sales tax can be. At Leonard Tam, many of our clients come to us querying some of the common myths that surround business and sales tax. If you want to make sure your business and sales tax return filing is accurate, it's time to learn more about the most common misconceptions.

Internet purchases aren't subject to sales tax

The issues surrounding sales tax and Internet purchases are particularly difficult. Technically, your sales aren't always subject to tax when they take place online. However, we're aware of a legal concept called Nexus that means you may have to charge it in states where you have a physical presence.

If you're unsure about whether sales tax is applicable, come to us. We stay abreast of this ever-changing element of tax law, so you can make your sales tax return filing is more accurate.

You can use sales tax to run your business

You should never use sales tax to run your business. Although you're collecting it and holding it, you have a duty to keep it to one side for the state to collect.

At Leonard Tam, we understand that holding your sales tax requires accurate bookkeeping. If you're struggling to stay organized, turn to us for advice.

You can write off all your home expenses if you work from home

Working from home certainly comes with some tax benefits. Although you can offset some expenses, you can't offset everything you do at home. If you try to, there's a chance that the Canadian Revenue Agency (CRA) will closely scrutinize your taxes.

If you're unsure as to what you can and cannot deduct, come to us. We'll ensure accuracy and help you maintain a steady relationship with the CRA.

All entertainment is tax-deductible

One of the greatest perks of running a business is being able to deduct for entertainment. In our experience, you can only deduct up to 50-percent for meals and entertainment. If you try to deduct too much, you may face a fine.

At Leonard Tam, we're highly knowledgeable about what you can and cannot deduct. With our approach to tax filing, we can help you offset the right entertainment costs and achieve accurate filing.

Federal income tax is unenforceable

As one of the most common myths, this could soon land you in hot water. Especially when it comes to sales tax filing.

This federal income tax myth stemmed from a court case that stated federal and provincial tax departments cannot delegate tax authority to one another. Unfortunately, some people have interpreted this to mean that federal taxes are unconstitutional. They aren't and you do have to pay them. As tax experts, we'd hate to see you facing hefty fines because of this myth.

Sales tax filing depends on voluntary compliance

To an extent, all tax filing depends on voluntary compliance. The CRA can't watch everyone constantly, which means they do depend on businesses to take an honest approach.

However, that doesn't mean that the CRA won't pursue you if you don't comply. In our experience, they will often catch up with those who fail to file their taxes. By complying voluntarily, you're saving yourself from a lot of stress.

Why dispelling myths is important

At Leonard Tam, we understand that buying into myths feels easier than closely scrutinizing them. However, this approach can also land you in trouble. Ignorance is rarely an acceptable defense, especially when it comes to taxes. As tax experts, we can help you file yours on time and accurately. We may even be able to discover some deductibles that'll help you save money. To arrange a consultation with us, call 416 783 2222.