Trade and Allowable Deductions

These flashcards cover key vocabulary and concepts related to trade and allowable deductions for self-employed taxpayers.

Deductible Expenses

Expenses that a self-employed taxpayer can claim against their business income.

Income Tax Act

Legislation that outlines specific sections allowing various deductions to taxpayers.

Legal Expenses

Costs that a taxpayer incurs for legal purposes related to their trade, which can be claimed as deductions.

Repairs vs Improvements

Repairs are restorations of damaged assets, while improvements increase the asset's income-earning capacity.

Bad Debts

Debts that can be written off and claimed as deductions when they become irrecoverable.

Doubtful Debts

Debts considered uncertain; a deduction may be allowed if they would have qualified as bad debts.

General Deduction Formula

The formula that allows taxpayers to claim expenses against their business income.

Allowable Deductions

Specific expenses outlined in tax legislation that can be deducted from taxable income.

Travelling Expenses

Costs incurred while traveling for business purposes that can be claimed as deductions.

Depreciation

Deduction allowed for the decrease in value of an asset over time due to wear and tear.