No question is too strange when it comes to potential tax deductibles, says an expert
Ever thought you would be living in a time when tigers, pet tarantulas and nipple pasties are tax deductible? Well, welcome to 2018.
As the population scrambles to complete their T4s in time for the April 30 deadline, H&R Block is reminding people that no question is too embarrassing when it comes to claiming back what they are owed.
Advisors are being urged to consider income that is not on a client’s T4. This can apply to office staff, construction workers or even strippers.
Lisa Gittens, a tax professional with H&R Block, said: “I literally did have a client [like that]. They were being paid in cash, plus they were receiving their tips in cash, so how do they report it?
“I explained to them there are benefits to how they report it. And then I asked, do you have any costumes, did you purchase anything to be on stage? And the deduction turned out to be the nipple pasties because you don’t use them anywhere else – you purchase them and you use them exclusively for work. That’s a tax deduction.”
Gittens experienced another extreme example of how purchases that allow you to earn an income can be claimed back when she dealt with a client in Vancouver who relied on a rather wild sidekick to bring in the cash.
She said: “He was a street performer with a tiger and wanted to know how to claim the tiger on his taxes. People were saying he couldn’t but I said, how do you earn your money? The Tiger! He’s a performer. You can claim all the food and all the vet bills because that’s how you earn your income.”
Gittens said the over-arching message is that if you are earning income and you have to pay specific expenses to generate that income, chances are they are deductible on your tax return.
The classic example is of a construction worker who works for an employer but who has to buy their own boots, safety hat and maybe even replace their own tools. The employer must, however, fill out and sign a T2200 declaration form detailing this.
H&R Block staff had other examples of embarrassing questions, including one about Irritable Bowel Syndrome. The answer: over-the-counter medicine can’t be deducted but anything you have a prescription for, can be deducted as medical expenses.
And then there was the example of someone who moved across the country for a job but had to make special travel arrangements for their pet tarantulas. Transporting these deadly pets, in turns out, is tax deductible.
Gittens said: “Moving expenses are incurred for all members of the household. His spouse, his children, his pets are considered members of his household, so he can claim them.
“When we talk about embarrassing questions, really there are none because if you ask, then we can determine which category your expense falls into.”
Another example that has prompted some confusion applies to blended families. The question to the tax expert went along the lines of: my boyfriend's six-year-old son with his previous girlfriend and that child’s half-sister (who is not related to my boyfriend) just moved in to our apartment. Can I claim the Canada Child Benefit (CCB) for them even though I’m not related to either child or married? Help!
Gittens explained: “We’re talking about families coming together and bringing children into their home. As long as you have care and control of any dependent under the age of 18, then you can apply to receive the Canada Child Benefit on behalf of that child. It’s not blood relation, it’s who has care and control.”
She added that CBB can’t be claimed on your taxes and you have to contact the Canada Revenue Agency directly and get the RC65 application form from then.
