Saturday, March 20, 2010

The Tax Man Cometh

I got a lot of useful information from our writers' group meeting this morning. After each one at the table had given his/her own bit of news, we had a speaker talk to us on the subject of Income Tax for Writers -- a very timely topic. Afterwards, the most popular question seemed to be which expenses we could claim as deductions when filing our income tax. It was suggested that if we are in doubt about whether or not an expense is eligible, we should ask ourselves honestly if the expense is related to our writing, and whether it is the kind of writing we do, or plan to do.

Our tax system in Canada is based on the honour system. That said, we must keep all our records for a period of seven years (six plus the current year) in case of an audit.

I have always kept a book which I call a general ledger where I enter, on the day that they occur, all the expenses and income from my writing. I know that's the old-fashioned way and that it is not necessary today. All the Tax Man wants are the receipts for our expenses and the slips we've received for income.

I store all my receipts in an accordian-style file folder with labelled tabs for office, car expenses, advertising, etc. But still I find my ledger helps me keep all those bits organized. I also find the ledger useful for tracking trends over the years.

Before we left the restaurant this morning, our speaker reminded us to save the receipt from the breakfast each one of us had paid for at the meeting. We can claim fifty percent of it as a legitimate expense. You learn something new every day!

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