I am in the RCMP/Canadian Forces, can I deduct haircuts on my tax return?

From time to time, police officers, and soldiers ask the question, can I deduct the cost of haircuts that are required in the performance of duty?

Not surprisingly, this question has been brought before the Tax Court of Canada.

In 1998, Thomas Cuddie and 10 other RCMP constables deducted the cost of their haircuts in addition to other materials, pagers and basic telephone service on their income tax returns. Cuddie went on the basis that these expenditures were supplies and therefore deductible under the Income Tax Act.  Judge Bell, known in the tax community to have ruled in favour of the taxpayer more often than not, presided on this case. He found that the items these police officers tried to deduct, including the haircuts, did not result in supplies being consumed. Accordingly, he dismissed the appeals by all 11 police officers.

A year later, in 1999, Roger Rouillard, a member of the Canadian Forces deducted $182 of haircuts on his tax return in addition to cost for cleaning and repairing his military uniform. Rouillard cited the Queen's Regulations and Orders for the Canadian Forces (specifically the Canadian Forces Dress Manual) relating to Personal Appearances. He even indicated that

My superiors required me to have my hair cut every two weeks and failure to do so might lead to disciplinary measures against me for conduct detrimental to good order and discipline.

 However, Judge Lamarre Proulx of the Tax Court of Canada, found that in line with the findings of the Cuddie case a year before - haircuts could not be considered supplies and therefore could not be deducted.

In summary, haircuts that are required in the performance of duty are not deductible under the Income Tax Act.

Should I claim my charitable donations this year?

Donations made to registered charities don't necessarily have to be claimed in the year it was made. In fact, you can include the following on your current year tax return.

• donations made by December 31 of the applicable tax year;
• any unclaimed donations made in the previous five years; and
• any unclaimed donations made by your spouse or common law partner in the year or in the previous five years.
• Up to a limit of 75% or 100% of your net income as the case may be. 

Can I Deduct My Home Office Expenses

This is perhaps one of the most frequent questions people who have a home office have.

The answer isn't quite simple but I'll try my best to answer it.

The first criteria in determining whether you can deduct your home office expense is if you are:

1. an employee with a workspace in your home, or
2. if you are run a business and have a workspace in your home.

Employee

I'll first discuss the first situation where you are an employee and have a home office. In order to deduct your home office expenses you must meet one of the following criteria:

• The work space is where you mainly (more than 50% of the time) do your work.
• You use the workspace only to earn your employment income. You also have to use it on a regular and continuous basis for meeting clients or customers.

Do note that you will need to get a T2200 that has been signed by your employer.

What can I deduct?

You can deduct a reasonable proportion of your home expenses that relate to your work space (i.e. square footage of space used for work over total square footage). Home expenses that can be deducted include electricity, heating, maintenance, property taxes, and home insurance. However, you cannot deduct mortgage interest or capital cost allowance (depreciation on your home). If you rent, simply deduct the portion of your rent.

What is a TFSA and How You Can Make the Most of it

In this article, I will explain the basics of what a Tax Free Savings Account ("TFSA") is. I will also explain some TFSA Strategies as well as some pitfalls that one should avoid.

Basics of a TFSA

A TFSA is essentially a speical type of "Tax Free" account which can be used to earn tax free income (such as interest, dividends, and capital gains). Beginning in 2009, all Canadian Residents aged 18 and over can contribute $5,000 annually into a TFSA. Any income earned on the contributions to the TFSA is tax free.

Contributions and Withdrawals

Contributions into a TFSA are not tax deductible and withdrawals are not subject to tax. Unlike an Registered Savings Plan ("RSP"), where your contributions are tax deductible and withdrawals are subject to tax. Once a withdrawal has been made, the contribution room equivalent to the amount of the withdrawal will be made available in the next year. Contribution room not used in one year will be carried forward to the next year.

Types of TFSA

The name Tax Free Savings Account can be quite misleading. A TFSA does not solely have to be a traditional savings account. In fact, it could be a Mutual Fund account, Self Directed brokerage account or a regular brokerage account.

How to make full use of your TFSA

Many accountants and financial planners recommend contributing the full $5,000 or as much as you can as early as you can. The reason being, the longer income gets tax sheltered, the greater the benefit to you.

Use Low Rate Credit Card Cheques Intelligently

So have you received a low interest rate credit card cheque from your Credit Card company. Well, for mine - RBC - sends me cheques a couple of times a year, where I can draw funds at various “teaser” rates - at one point being as low as 0.9%. But with these “teaser” rates, comes the truth to the facts behind using these cheques or balance transfer offers.


What are teaser rate cheques? These are cheques that allow you to advance funds at a low rate for a specified period of time. Instead of teaser rate cheques, this article would be applicable to low-rate balance transfer offers too.