With the intense physical labor and never-ending headaches, many construction workers would definitely appreciate a long day of rest away from the hustle and bustle of work. Sadly, we can’t lighten your construction work. However, at Padgett Business Services, we can help ease your tax reporting burden. Construction contractors are usually classified as sole proprietors in Canada. This means that they are considered as self-employed by the Canada Revenue Agency (CRA).  They don’t have their taxes withheld from their paycheck like regular employees.  Instead, all of the tax-prep burdens will fall on them.  This means that they have to pay their own taxes instead of having an employer submit the tax for them. This also means that you can claim deductions on work-related expenses.  The following deductions can help construction contractors lower their tax burden and save money:

Contract Labor

Payments made to your subcontractors and employees are deductible.  Employees require that taxes, CPP and EI be withheld and remitted monthly.  There is also a requirement to file T4s at the end of the year.  Subcontractors do not require the withholding of taxes, CPP and EI.  However, construction contractors are required to file the T5018 to report the subcontractor’s income at the end of the year.

Business Insurance

The cost of insurance premiums such as general liability insurance related to your business is entirely deductible.

Advertising

Self-Employed construction contractors can deduct any materials used to market your business including branded promotional items, flyers, and the cost of hiring a person to design and create them for you.

Legal and Professional Services

Fees paid to your attorneys, accountants, tax preparers, and any other professionals are deductible. However, if the fee is paid to your employee, it should be considered as wages.

Transportation Costs

You can deduct the cost of your fuel, insurance, repairs and depreciation on your vehicles.  There are rules related to exactly how much can be deducted but for the most part, the mileage that is used for work can be claimed as an expense.

Health Insurance Deduction

You can also deduct the cost of your personal health insurance premiums as a self-employed individual as long as you offer the same health insurance program to your employees.

Home Office

Self Employed Construction contractors can deduct a portion of their home costs as a business expense.  The amount that can be deducted is a total of the insurance, property tax, condo fees, mortgage interest, utilities and repairs that can be assigned to the space used by the business.  So if the contractor uses 10{9de21fd12e8ca6488972186bbb5fe81becd95b7b490974f1f8badcf668439b39} of the home for storing construction materials and tools, then 10{9de21fd12e8ca6488972186bbb5fe81becd95b7b490974f1f8badcf668439b39} of the above costs can be deducted from the construction income.

Are you a Construction Contractor and Behind on Taxes? We Can Help

We pride ourselves in providing top-notch personalized consultations and thoughtful tax planning for construction contractors in Calgary and area. We will help you minimize your tax exposure, eliminate surprises, and save more of your hard earned money.

What are you waiting for? Call us today on 403-452-8183, or contact us here.