Every year millions of Canadians swarm the big box stores and lineup either physically or virtually to snag some sweet deals. Despite the pandemic, it was estimated that Canadians spent about $4.6B in 2020 on Black Friday, which brings the average to about $360 per individual Canadian. Black Friday has also now become the most profitable holiday, surpassing even Boxing Day or Cyber Monday in recent years.
While this spending may seem like a lot for the average person, it’s worth noting that Black Friday is an incredibly good time for businesses, small or big, to purchase almost anything needed for their operations. This gives them an opportunity to not only save money on the sale price of items but to also turn around and use those purchases as write-offs — effectively hitting two birds with one stone.
What is a write-off?
First let’s just clarify what we mean by write-off: A write-off is a business expense deducted for tax purposes. Expenses are things obtained through operating a business for profit. The price of these items is deducted from revenue to reduce the total taxable revenue. Examples of such write offs include office space (real-estate), vehicle expenses, equipment, etc.
What does it mean to write off taxes in Canada?
You can write off dozens of things on taxes such as the cost of training new employees, safety gear, software, some business travel expenses and much more . Some income-tax write offs also offer non-refundable credits that reduce you overall tax payment. Write offs can save taxpayers money on their tax bills by cutting down tax debt and taxes. You can also write off various other expenses including child support and employment costs to reduce your total income.
In the case of purchases made on Black Friday, only some things apply as you likely won’t be getting a deal on your rent, mortgage payment or any bad debt. This being said, there are tons of items that you can write off and we’ve compiled a list of categories and items that you could write off to your benefit.
In any case, it is recommended to consult with an accountant as these benefits could vary if you are an individual, a small business or are taking advantage of being incorporated.
Black Friday Tax Write-Offs to help reduced taxable income
Computers and tablets
The first thing that comes to mind and has become one of the top purchases for businesses on Black Friday is computers and related items. If you’ve visited a Best Buy, Staples or Canada Computers you know how many people are after crazy deals on Laptops, tablets and desktops.
Shopping for one of these items on Black Friday often guarantees a better bang for your buck when it comes to performance per dollar, something that can make the difference between your device lasting three years instead of two.
In Canada, you cannot write off the purchase of a device listed above in only one year. Instead this business expense will be deduced over multiple years as a depreciation on capital assets, meaning an amount can be used over a longer period of time to help reduce your business income.
Now its one thing to buy a whole new computer but what about everything else that goes with it? If you need to purchase a new monitor, mouse, keyboard or even a printer, these are all business expenses that can can be written off. Some of these like the purchase of a large industrial printer could also follow the rule of a depreciation asset. It is recommended to consult with an accountant to understand what can be written off entirely in one year and what can’t. Other items to consider as a tax write off in this category are:
- Portable hard drives
- Charging cables and ethernet cables
- docking stations
- Routers / networking equipment / modems
Software and Subscriptions
Every business relies on some form of software or service subscription to operate. In many cases, this includes the purchase of accounting software (ironic) and enterprise day-to-day suites like the Microsoft or Adobe suites. It is possible that your company leverages a back office outsourcing company to do most of the heavy lifting, but its likely you your business still needs software at some level.
The recent trend that we’ve seen in the software world is offering said software with a monthly or yearly subscription. You can still use this payment as an expense, so if you decided to save a lot on a new yearly subscription or chose the monthly option, you can write it off.
Often you can get really good deals on new account activations, which is especially helpful for a new company or a new business owner.
The purchase of a new phone or multiple phones for your employees can be a great tax write off. In recent years the cost of a new device has greatly increased which is both a burden for individuals and business owners. Thankfully you can claim some of its value back.
In some situations you can also expect your new phone purchase to come with spendable credits, an example of this in recent years is Best Buy offering anywhere from 100-500$ in store credit with the purchase of a new phone.
You can turn around and spend that extra money other items you may also need.
TVs and Projectors
Conference rooms and dining areas often make use of TVs or projectors. Over the years, televisions have become much cheaper. Even now as we transition to 4k as the standard television resolution, the price may not be too bad. Consider the cost of new TVs or projectors as a tax write off.
You also consider devices like Chrome casts and Apple TV as they are frequently used in conference rooms or to play content on displays around your premise.
Kitchen and Appliances
Restaurant owners across Canada use Black Friday as an opportunity to upgrade their commercial kitchens and supplies. Over the years, an increasing amount of suppliers offer great deals on large industrial appliances, tables, seating and more. These larger expenses also count as depreciating capital assets to help balance the tax bill over a few years.
Additionally, if your business is related to renting out real-estate, this is a great time to buy appliances for your units or to furnish them altogether.
Vehicle purchases and leases
The delivery and servicing industry has been using this trick for a while now. The purchase or leasing of new vehicles can be quite beneficial with the right Black Friday deal for both the business and from the angle of deductions. If you are self-employed, you should talk to an accountant to see how you can use this to reduce your income tax as you may only be able to claim a certain percentage back, depending on your division between personal and business use.
You know those post-its and pens that your employees seem to be losing by the dozen every day? Well perhaps you should take advantage of Black Friday deals to stock up for the next year. Office supplies of any kind are heavily discounted on Black Friday especially in larger quantities. Check your local Staples, Walmart or Amazon for great savings, and claim all of it back under your Office supplies write offs.
While most think of office supplies as pens and paper, you can also think about getting that giant whiteboard you’ve been wanting or new filing cabinets among other things such as:
- staples / staplers
- markers / highlighters
- usb sticks
- notepads / sketchpads
Things to consider before you purchase anything
While its nice to spend money on Black Friday to take advantage of great sales and get some big ticket items that you or your business could use, there are certain things to keep in mind if you plan on writing off some of these purchases.
- First, consider that buying an item on a payment plan may or may not save you money – You can try to offset the cost of the interest generated by your payment plan by writing off the payments and sometimes even the interest. Consulting with an accountant is highly recommended in this scenario to determine if it is to your advantage or not.
- It’s easy to get carried away with spending, so keep in mind that your write offs can reach a maximum depending on their nature and you may not end up saving as much as you anticipated. Remember the goal is to save money!
- There is a greater limit of what you can write off depending on if you are planning to use these expenses as an individual, a sole proprietor/partnership or if your business is incorporated – again the guidance of an accountant can help you determine what would work best for you.
All in all, Black Friday is a great time to lower your cost for items and assets that you or your business will need. Business owners can reduce the amount of tax they will need to pay by claiming some of the purchases as expenses as tax write offs.
If you want to learn how you can maximize your personal, small business or corporate taxes, you can have chat with a FinanTech Chartered Accountant and see what you can use as business expenses.