The most common tax advice on the internet is “just write it off.” Buy the truck in December. Expense the trip. Put the dinner on the company card. It’s a write-off.
Here is what a write-off actually does. A deduction reduces your taxable income, not your tax bill. If your BC corporation earns under $500,000, it pays tax at 11%. A $1,000 deductible expense saves the company $110. You still spent $890.
As a sole proprietor in a middle bracket, the same $1,000 might save you $300. You still spent $700.
The rule
Never buy something you don’t need because it’s deductible. There is no deduction rate in Canada that turns spending into profit. The people posting “I wrote off my G-Wagon” are describing American rules, badly, and even those don’t work the way the video implies.
When spending does make sense
The deduction is a discount on things your business genuinely needs, not a reason to buy them. Three cases where timing matters: you were buying the equipment anyway, so buying it before your year-end pulls the deduction forward a year. Your income this year is unusually high, so accelerating planned purchases has more value than usual. The purchase qualifies for capital cost allowance and you understand the half-year rule before you count on the number.
That’s it. That’s the whole list.
If a video starts with “the CRA doesn’t want you to know this,” close the app.
General information about how the rules work. Your situation will turn on its own facts, and the figures above move with your province, your income mix and the year. Have someone run your numbers.