Video: What is a business expense?

Suspended senator Mike Duffy’s expense scandal has thrown a lot of uncertainty around what is — and is not a legitimate business expense.

Duffy, who was charged with 31 counts of fraud, breach of trust, and bribery over business expenses that he claimed in connection to work-related travel, has pleaded not guilty.

His trial is currently adjourned until August 11 when key witness Nigel Wright, former chief of staff to Prime Minister Stephen Harper, will take the stand.

In the meantime, lets take this chance to look at exactly what is a legal business expense and where things can go wrong.

According to the Canada Revenue Agency, “a business expense is a cost incurred for the sole purpose of earning business income.” The video below explains more on the subject, including some things that you cannot claim as a business expense.

Make sure that you pay close attention, because mistakes could cost you a penalty of 50 per cent of the amount that the omission or false statement caused.

If in doubt, seek the advice of a professional tax expert. The cost of their fee could save you a lot in the long run if anything is ever omitted or misfiled.

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Video transcript: Business Expenses

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