Taxes - Using your business/aquarium expenses for write-offs?

[EmilyB]

From an accountant, the object of a business is to make money, not have losses. And yes, you need income before you can write off expenses.

Losses from a "hobby" are not allowable. If you have a business license, you may get away with a loss if you have taxable income the following year. I would refrain from a frivolent claim which could only cause you problems in the future.

[andsoitgoes]

Originally Posted by EmilyB

From an accountant, the object of a business is to make money, not have losses. And yes, you need income before you can write off expenses.

Losses from a "hobby" are not allowable. If you have a business license, you may get away with a loss if you have taxable income the following year. I would refrain from a frivolent claim which could only cause you problems in the future.

Thanks - that's what I'd been under the impression of. I've already broken through that red barrier, but all of my major purchases of the lights, tanks, etc were within that first year. No major extra expenses will keep me away from actually bringing in some sort of income.

I don't want to just put in losses for the sake of losses, but our goal was to do breeding of f/w fish and do coral propogation - Actually, I guess a question of mine is if you start a business and realize that you're not going to actually MAKE money from it, and that you've expended a ton of cash as outflow, why is that not "acceptable"?

[EmilyB]

Well, it's not so much business as businesses that could be interpreted as a hobby.

Hobby and Personal Benefits

It is important to realize that the reasonable expectation of profit test is not completely dead. In cases where the business has an element of hobby or personal benefit, the Court is saying that Revenue Canada may still apply the test.
Hobby and personal benefits cases include horse farms, Hawaii and Florida condominium rentals, ski chalet rentals, yacht operations, dog kennel operations and similar types of endeavours. These are all cases where the taxpayer has invested money into an activity from which the taxpayer derives personal satisfaction or psycho-logical benefit.

Not that you get any pleasure out of reefkeeping...

I just wanted to point it out so people don't think because they sell a few frags, they can write off their aquariums.

[andsoitgoes]

good point - thanks for bringing that up, that's acutally a huge help.

But then how does that go for people who are huge fish fanatics but also run pet stores? but I guess that's where the test comes in, and is why I'm going to focus on profit this year, so they'll see the balance. Now, if I can just get people to buy things.

And hey - psychological benefit? GUH - How about psychological STRAIN!! I should write off therapy bills from the heck this has caused me!!! :P

Originally Posted by EmilyB

Well, it's not so much business as businesses that could be interpreted as a hobby.

Hobby and Personal Benefits




Not that you get any pleasure out of reefkeeping...

I just wanted to point it out so people don't think because they sell a few frags, they can write off their aquariums.