QUESTION:
If I have a 9-5 job and want to start a sole prpritership ,can I write off those expenses against my personal income from my 9-5 job even if I am not making a profit yet with the sole propritership?
Thank you
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david ingram replies:
Just about. As long as it is a legitimate business, any losses are deductible against your wages from the District. You would likely use Canadian form T2124 which you find at - http://www.cra-arc.gc.ca/E/pbg/tf/t2124/t2124-06e.pdf
You will notice a place for office in the home as well which means that you get to calculate a percentage of taxes, mortgage interest or rent But there is an exception if you are not making a profit.
That exception is an office or storage or studio in your home. Although you can calculate the expense on a square footage basis, you will notice that it is not a deduction unless or until you have a profit in the business. However, you 'do' get to carry the office in home expense forward until you do make a profit.
Being a sole proprietor can also help make your mortgage interest 100% deductible. Go to www.centa.com and read the November 2001 newsletter in teh top left hand box.
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