Can RMTs write off their Lululemons?
Season 2, Episode 6 of Schitt’s Creek is my all-time favourite. You may remember the scene where David learns what a tax write off is. If you haven’t seen it yet, then stop reading this and check it out on Netflix (it’ll be worth the subscription, I promise); or if you’d rather, here’s a low-resolution copy of it on YouTube. Enjoy! I’m sure it won’t be long before it’s taken down due to copyright.
David clearly has no idea what a write-off is, and who pays for it. In case you haven’t figured it out yet, what David says here is definitely NOT true!
“A write-off is when you buy something for your business and the government pays you back for it.”
Johnny, on the other hand, gives us the most textbook definition of what a write-off is.
“A write-off is a business expense used to reduce your taxable income.”
No one wants to pay more tax than they have to. Which is why, in Episode 18 of the Massage Life Podcast, Melissa (RMT) and I sat down together to discuss some of the things self-employed RMTs may be able to write off. Below is a list of some of the things we talked about. Please note that every RMT’s business is different; therefore, some of these expenses may not be applicable to you. You should definitely speak with your accountant first before writing off any of the following. Also, it’s worth mentioning that I don’t discuss everything below in great detail. I don’t want this article to be a mile long; I also don’t want to bore you to death. The purpose of this article is to create lightbulb moments where you find yourself saying, “I bet that applies to me.”
Okay, before we get into the juicy details, I’m going to pull a quote from everyone’s best friend … the Canada Revenue Agency (CRA). Keep this rule in mind whenever you ask yourself the question, “Can I write this off?” Here it is …
“No deduction shall be made in respect of an outlay or expense except to the extent that it was made or incurred by the taxpayer for the purpose of gaining or producing income from the business or property.”
I love this quote (please forgive me for being a huge nerd). If you’re still confused about what it means, here’s my translation.
“You don’t get to write off your Lululemons because really expensive yoga pants don’t help you earn business income any more than regular yoga pants do.”
There, I said it. You don’t get to write off your Lululemons. In fact, you don’t get to write off your cheap yoga pants either. It’s a hot debate, but it’s true. Don’t hate me. Hate the CRA. If you’re interested, I discuss this in greater detail in my course Business & Income Tax Essentials for RMTs.
Alright, here’s the list.
1) Business Use of Home Expenses
If you operate a home-based practice or you do mobile massage and have a home office where you handle all the administrative duties for your business, then you may be able to write off a portion of the following household expenses: rent, property insurance, property taxes, mortgage interest, utilities, and maintenance costs.
2) Motor Vehicle Expenses
If you earn self-employed income and use your motor vehicle for the purpose of earning a profit then you are able to claim the related business expenses on your income tax return. You can only claim the business-related portion. This would include: fuel and oil, insurance, interest (if financing), lease payments (if leasing), license and registration, maintenance and repairs, and capital cost allowance (if you own).
3) Massage Supplies
This is an obvious one. Linens, oils, lotions, pillows, those fancy little holsters you use to hold your lotion bottles … write it all off!
What about massage tables? Yes, but HOW you write it off is important. Let me explain. If you buy a cheap table for a few hundred dollars, then you’re fine to write off the whole amount. If it’s one of those expensive hydraulic tables, then this expense needs to be capitalized and then written off over multiple years by claiming something called a capital cost allowance (CCA). This is where you may need the help of a super nerdy accountant.
4) Music Subscription
Have you ever had a massage with no music? Elevators are some of the most uncomfortable places on the planet and even they have music. Wait, do they? Now I’m not so sure. Regardless, I can’t imagine how awkward it would be to receive a massage from someone who refused to talk and play music. If you have a Spotify/Amazon/Apple Music subscription and you spend a good chunk of that subscription to play music during your massages, then write off a portion of what you spend.
5) Rent
If you rent a room at a clinic, or rent some other space that is used solely for business purposes, then you can deduct the full amount.
6) Advertising
Ads on Facebook, Google, Instagram, etc. are all fully deductible. So are website registration and hosting fees. Maybe you use a booking and billing software such as Jane or Noterro. If so, write it off.
Other common advertising expenses include things like business cards, pamphlets (what is this, 1995?), trade shows, sponsorships, professional marketing plans, and client gifts. Melissa sends packages of tea at Christmastime to some of her most loyal clients; we write these off as well.
Speaking of professional marketing plans, maybe you have a Canva subscription that you use to help you create branded social media posts for your business. If so, you should write off your subscription. Or maybe you work with a marketing expert like Doreen Vanderhart from Knap Creative. If so, write off your expenses. Shameless plug, Doreen created our course Social Marketing for Wellness Practitioners. It’s a must for anyone looking to up their social marketing game.
RMTs often ask me if they can write off volunteer time as advertising. The short answer is no. Unless you’re a volunteer firefighter or search and rescue worker, you’re out of luck.
7) Meals & Entertainment
No, you can’t write off that overnight bender you once went on with some of your girlfriends. But that time you went out for dinner with a mentor to discuss ways you could grow your business … totally reasonable. In most cases, only 50% of these expenses can be written off.
8) Travel
If you travel out of town for business you can deduct the full cost of transportation, including airfare and hotel accommodations.
Melissa once travelled to Edmonton to attend a soft-tissue release course. She wrote off her hotel, and 50% of her meals. She also recorded her kilometers driven as business travel (see point 2 above). If she had flown then it would’ve also been reasonable for her to write off her airfare.
9) Fees, Licenses, and Dues
Membership fees you pay to your professional association … write them off.
Maybe you work in a city (e.g. Calgary) that requires you to have a massage practitioners license. If so, write it off.
10) Professional Fees
Legal, accounting and other professional fees are fully deductible. So, if you pay a nerdy accountant like me to help you with your books, then write it off. Or if you hire a lawyer to help you draft a contract, then write this off as well.
11) Continuing Education
You can deduct the cost of any continuing education, if this education: maintains or improves skills required in your work as an RMT; and is required by your professional association to maintain your status as an RMT.
Any courses you purchase from us (come on, you know you want to), or any other continuing education provider, can be written off. Keep in mind there are some exceptions to this, like paying an excessive amount to take a cupping course in Costa Rica. It does sound fun, but it’s not reasonable, especially if you can take that same course close to home for much less.
12) Insurance
Wow, we’ve reached the most boring item on this list … insurance. You can deduct any premiums that are directly related to your business. Automobile insurance should be allocated as part of your vehicle expense deduction. Home insurance should be allocated as part of the business use of home expense deduction. In most cases you cannot deduct life insurance premiums.
We’re almost done. Bear with me. You can do this!
13) Interest & Bank Fees
I shudder whenever I find out that someone’s running a business using their personal bank account. If you don’t have a separate bank account, then you should get one. It’ll make your life so much easier. Any fees you’re charged on this account can be written off. Also, interest incurred on money borrowed for business purposes is fully deductible.
14) Office Expenses
I once accidentally stole a pen from Staples; I felt so bad when I realized what I’d done. Stolen pens shouldn’t be written off. They should be returned. But if you do purchase things like pens, paper, envelopes, and stamps for your business, then you can write these off.
I have a clean conscience. I returned the stolen pen.
15) Cellphone & Internet
To the extent that telephone and internet service at an individual’s home is used for both business and personal purposes, only the business portion is deductible. A reasonable basis of proration should be used to determine the portion of any usage attributable to the individual’s business.
It would be reasonable to include Internet expenses as part of your business use of home expense deduction (see point 1 above). However, in some case it may be reasonable to write off a larger share of your personal cellphone. I would recommend consulting with your accountant about this.
16) Health Premiums
Premiums paid to a private health plan can be deducted from your business income, but you must be the sole proprietor of your business, and it must be your primary source of income.
Well, that was fun. As mentioned earlier, you should consult with your accountant about your specific tax situation. This is hardly professional advice. It’s a blog post that was written close to midnight. I’m not liable if you try to write off a year’s supply of coffee.
Thanks for reading. I hope you found this article helpful and entertaining.
What are some things you write off, or wish you could write off? Leave a comment below. I’d love to hear from you.
