As Canadians prepare to file their tax returns, experts say they may want to start thinking outside the box.
28/03/2009 6:41:15 PM
Pets and parties on list of strange tax claims
Parminder Parmar
They note that there are hundreds of obscure -- and sometimes strange -- deductions that residents could declare but are unaware of. They include write-offs for such things as plastic surgeries, lunchtime child-care costs, and hair transplants. The variety of deductions could even allow marijuana growers to take advantage of some loopholes.
"No one would say to us this is what it is (pot paraphernalia). But they would say this is money for 'equipment and supplies,'" Cleo Hamel, a senior analyst for H&R Block.
The point is, she notes, that tax law is often complicated and surprising, meaning that Canadians need to be aware that there are a multitude of unusual ways they can get bigger returns or pay less to Ottawa.
Jimmy Menegakis, a Montreal chartered accountant, says that while the Canadian Revenue Agency provides a number of unusual tax breaks, there are also many pitfalls. The number of strange but legal tax breaks have led some residents to push the envelope. In recent years, Canadians have filed deductions for partying, medically inspired travel jaunts, and even hair cuts.
Hamel says that's why it's important that Canadian find out what is and isn't allowed before they mail off their returns.
Here is a list of what may be considered unusual tax breaks, followed by some requests for unusual tax deductions that just didn't pass muster at the CRA. Unusual tax breaks
Pet food
A farmer was allowed to claim cat and dog food as expenses because the animals were outdoor pets. The tax court decided they were used to keep wildlife away from a patch of blueberries.
Cosmetic surgery
Breast augmentation procedures and other plastic surgeries can be written off - if they provide psychological and physical health benefits.
Hair transplants
The procedure is considered a medical expense because it is thought to help the patient's health.
Bad debt
An "Allowable Business Investment Loss" deduction may be granted if a small business corporation owes the tax filer a "bad debt." This can also be applied in cases where an individual owns a share of a small business corporation that has gone bankrupt or insolvent.
Meal supervision costs
Lunch time supervision costs for kids may be thought of as child-care expenses. Therefore, they are allowed as claims by the CRA. These deductions may also be claimed for after-school programs.
Hair cuts, dry cleaning, clothes
These cannot be claimed specifically, but there is a general tax credit available to any one with a T-4. It provides about $150 savings each year to cover expenses such as dry cleaning and hair cuts. Filers do not need to itemize or list their expenses on their returns, but are instead eligible for the deduction if they file for it. Unusual tax claims denied
Health holidays
Oddly enough, tax experts get an unusually large amount of requests each year from clients who believe they can write off their sunny holiday travel expenses - with a note from their doctor. But sea cruises, trips to Mexico, and Florida vacations cannot be deducted, even if a dermatologist or physician says it would help a person's ailment, skin condition or overall health.
Footballs
A professional athlete tried to make a claim for footballs he threw into the stands to celebrate during games. The courts said, no.
Partying
The courts also rejected an actress' claim to deduct the cost of going to post-production wrap-up parties. The judge said in the specific case it wasn't clear that the actress had worked in all of the productions for which she attended the parties.
Gambling losses
A pathological gambler was not allowed to claim his losses as tax deductions against his income from other sources. The courts said he did not have a "reasonable expectation of profit."
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