Taxes, Taxes, and Taxes

by Patricia Cullen on November 25, 2008

Image: twon

Originally published in the Vancouver Actor’s Guide February 2008 newsletter.

Note: We’re re-posting this now as a reminder that tax season isn’t too far away.  Given the economic slump and financial blip many people are facing heading into the holiday season, it’s wise to stay on top of your financial situation including what you expect to expense for business-use.

———–
It’s tax time! What could possibly be more exciting than doing your taxes? How about writing off the many expenses you’ve incurred doing business as an actor. Getting money back is always exciting and writing off those expenses is key to that endeavour, but for actors it’s not exactly a ‘cut and dry’ process. Yes, there are many software programs designed for the average tax-paying user, but for those self-employed these programs are usually too basic to fully service the user, never mind those who make their living in the industry.

So what are the options? Ask a professional. I met with Marianna Scott of Quantum Accounting Services Inc. where she’s been sharing her tax expertise with those who work in the arts & entertainment industry for the past 5 years. I was both shocked and surprised by the information she shared with me. Here’s a quick look at what you can and what you sadly cannot write off as an expense.

Promotions > Yes – Headshots, website registration fees, business cards, demo reels.

Portion of Rent > No – You cannot write off a portion of your rent for home office use unless you work from home in another capacity other than the acting.

Internet > Yes, but… – With things like internet, there is no set percentage that is permissible. Marianna urges people to be conservative with this, and be as accurate as possible with their actual business usage.

Office expenses > Yes – Everything. Pens, post-its, paper. Even the gas you spent driving to pick up office supplies.

Computer > Yes – You can write off a depreciated amount every year based on what percentage it’s used for business. For computers purchased in 2007, the depreciation rate is now 45% and the first year rate is 22.5%.

Cell phone > Yes – Cell phone usage can be written off 100% if you also have a land line. If you only have a cell phone, it’s suggested that you expense only a percentage of the use.

Landline > Yes & No – Only long distance charges related to business.

Travel expenses > Yes – Such as ferry, flight, car rental, cab, gas, hotel and food expenses when having to travel to another city for auditions or work.

Parking > Yes – Must have receipt. Sorry, no allowance for meter parking.

Bus passes > Yes – Bus passes are now tax deductible for everyone. You can submit receipts for single-use, FareSavers and monthly FareCards. Enter the total amount paid on line 364 of schedule one.

Cycling expenses > No – Unfortunately, the CRA does not allow bikes to be considered transportation. (Don’t get me started. Just don’t…get me started.)

Auto Expenses > Yes – But you’ll need a Captain’s Log to track your kms. Log your starting & year end odometer reading. Keep track of all kms accrued for business throughout the year with to & from destinations including purpose of trip. Total kms at year end. Divide business kms into total kms travelled that year and expense that percentage of gas. Keep your receipts for gas, insurance, repairs and yes, carwashes.

Personal Development Courses > Yes – Such as stunt, acting, dance, fencing classes, etc. but this does not include gym memberships, yoga, pilates, etc.

Beauty & Fashion > No – Haircuts, manicures, pedicures, clothes or makeup unless certain items/services were requested for an audition/shoot and you have the request in writing stapled to the receipt and can prove, should you be audited, that the item was used solely for the purpose of business.

Movies, movie rentals and books > Yes – Provided that it is for research or educational purposes specific to a particular part you will at least audition for.

Meals > Yes – Purpose of meeting and names of those you met with must be written on the back and you can only expense their meals, not yours. So…remember, they ordered the wine.

For some, a lot of this is news and about a year later than needed. So when I asked Marianna for a little direction on how I could be better prepared for tax time next year, here’s what she said;

“Buy an accordion file. Organize your receipts by category. Not date. Have sections for income, travel, auto, office, promotions, t-slips, medical, childcare, etc. Save EVERY receipt because you never know. At the end of the year, total each category, give the whole folder to your accountant and keep that receipt too because you can write off your accountant’s fees.”

But does it matter how much actual “work” you get to be able to write these things off?

“It doesn’t matter how much work you get, it matters much more how much you have done to try to get work. Auditions, memberships in actors guilds, resumes sent out, that kind of thing. What you want to be able to do is prove to CRA that this is not just a hobby but a real attempt at earning your living this way.”

If I shot a gig in December 2007, but I didn’t actually receive the payment until February 2008, which year do I allocate that money?

“For all self employed individuals, income is determined by the date they received the payment.”

“One thing your readers should know is that if their total income from self-employment is more than $30,000, they must register for GST. If they don’t, they may owe the government from a backdated amount. There’s no cost to register and no cost to deregister if your earnings fluctuate over the years. And if you are registered for the GST, you can expense 100% of GST from your expenses.”

Now this is just a general guideline, in no way is it comprehensive. And it’s worth mentioning that while yes, you can write-off a lot of expenses, it’s good to know the line. A massive slew of expenses will raise an eyebrow which may bring on an audit. And one audit tends to encourage other offices to audit as well. It’s best to be practical and stay off the radar, even if it means sucking up some cash spent on expanding your dvd collection.

Here’s another thing you may or may not know. And it’s an interesting look at government policy. The self-employed are not required to have their taxes in until June 15th. This goes for your spouse as well. However, if you owe the government you must pay them but April 30th. Yes, of the same year.

So, if you’re like me and more than willing to hand over all your tallied receipts to someone else for tax time, here’s one last bit of information you should know. You’re looking at only a 1 week turnaround time if you were to visit Marianna at Quantum before the end of February and after that, about 2 weeks.

Contact:

Quantum Accounting Services Inc.
Marianna Scott
Marianna@qas.bc.ca
604-662-8985
205-873 Beatty Street, Vancouver, BC
www.qas.bc.ca

{ 4 comments… read them below or add one }

chxinger January 21, 2009 at 9:32 pm

I pay 15% to my booking agent. How do I write this off? Do I need to send a 1099?

Kenji Maeda January 22, 2009 at 1:10 am

@chxinger
Form 1099 is used in the United States and the information provided in this blog is for Canadian actors. The best thing to do is ask a local accountant about your situation. Check out the article at backstage.com as it’s specific to the American market.
http://www.backstage.com/bso/advice-columns/business-of-acting/actors-assets/article_display.jsp?vnu_content_id=1003928608

Mi February 11, 2009 at 10:20 am

Hi, I was wondering if anyone wanted to share a spreadsheet they use to summarize their year? Thanks.

Patricia Cullen February 19, 2009 at 3:03 pm

Hi Mi,

I have one I could share with you. Email me and I’ll send it over to you.
Cheers!
Patricia
patricia@productionheads.com

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