Sorted was designed to track business expenses as you go and help track sales taxes paid. Sorting your transactions regularly will help you to stay on top of taxes.
While Sorted enables you to track transactions from linked accounts, some types of business expenses should be reviewed to make sure they are properly captured when you use Sorted.
Below are a few examples:
Income Taxes Deductions
Big purchases you will use for more than 1 year: If you purchased assets (e.g. vehicle, office furniture, etc.) for your business, you may be able to expense a portion of the total cost each year over the useful life of the asset. This is referred to as a capital cost allowance (CCA). The CRA provides detailed information on deducting the cost of different assets over a several year period.
- Sorted captures the full amount of an expense when the item is purchased, you may need to review large transactions and reduce the expense amount recorded if this item should be claimed over multiple years. You will need to keep track of any unclaimed amount for future year filings so you don’t miss out on tax savings.
- Tip: Manually add a transaction for the portion of the expense that you will be including in the current tax year. You can add a note to the transaction in the notes field to act as a reminder; this note will also be visible on your excel report.If you purchased the item this year and you will not be claiming the full amount in Sorted make sure that you remove the original transaction to avoid double counting
Interest on a financed vehicle: If you financed a vehicle, you may be able to expense a portion of the interest paid on your vehicle loan based on the percentage you use the vehicle for your business.
- The interest paid on an auto loan is incorporated into the overall transaction amount of the loan payment. You will need to review your payment statements and include this information at the time of filing in accordance to the CRA guidelines.
Interest on your mortgage: If you have a home office, you may be able to expense a portion of the interest paid on your home mortgage based on the percentage you use your home for your business.
- The interest amount paid changes on each mortgage payment. To include your mortgage interest in Sorted, you will need to review your year end mortgage statement and include the details of the interest paid at the time of filing your taxes.
- Tip: To capture your mortgage interest in Sorted, manually create a new transaction and enter the full amount of your mortgage interest paid into the expense category “Other Home Office Expense”. The percentage of business-use-of-home that you have identified in your profile will be applied to the value. If you do not record mortgage interest in Sorted make sure that you do not forget to include this at the time of filing your taxes.
Sales Tax Refund - (Input Tax Credit)
Travel expenses: Sales tax on travel expenses varies based on where the expense was incurred. Refer to your receipts to maximize your input tax credits.
- Tip: In Sorted, make sure that you have added in the applicable sales tax as reflected on your receipts.
Big purchases that you will use for more than 1 year: Full input tax credits may be claimed in the first year on assets which are purchased for 100% business use even though the expense amount is captured over multiple years.
- You can review the sales tax applied on a transaction within Sorted to ensure that it aligns to the amount of the input tax credit to be claimed.
- Tip: You can edit the sales tax applied to an expense or manually add a new transaction to capture the difference in the input tax credit to be claimed. A note can be added in the notes field to help track any amendments; this note will also be visible on your excel report.
Motor vehicle purchase: Input tax credits vary depending on the percentage of use of a vehicle for business purposes.
- Details of the sales tax paid on the purchase of a vehicle can be found on the sale invoice. At the time of filing your taxes, refer to the sale invoice and the CRA guidelines for the input tax credit that can be claimed in accordance with percentage use for business.
Seeking advice from a professional who knows your unique situation can help you to maximize your deductions.
Our team is available to help you understand how to make the most of Sorted please reach out at 1-888-234-8780 or firstname.lastname@example.org
This article offers general information only and is not intended as legal, tax, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed.All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by RBC Ventures Inc. or its affiliates.