Hobby business became a serious business... how far back can I go with claiming taxes, writing off, etc?

Question

I have every single receipt for every expense for the past 5 years ... how many years can I go back to claim these? I have never charged tax on my product, but I know that I would have to charge tax once I registered. Anyone know of a good small business tax program that I could do this myself?

P.S. This is for an Ontario, Canada small business.

Thanks!

Erin

Answer 1

Unless you qualify under the fairness provision to open the statute-barred years for reasons beyond your control, the  normal period for taxpayers to correct the federal tax provisions, and obtain refunds for the resulting overpaid taxes, is three years -- the current year and the two previous years counting from the notice of assessment date of your 3rd last tax return.

It is important to note that the Canada Revenue Agency (CRA) is bound by the three-year Statute of Limitations in reassessing taxpayer's returns -- except if it suspects fraud, in which case it can reassess older returns.

Note also that expenses from a hobby is generally not deductible, and the expenses only become deductible if the hobby becomes a business with a reasonable expectation of profit in a particular year.  

The tax programs sold at Futureshop or Staples should work OK for you.