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Eligible Business expenses


#1

I have a “potential” new client, a real estate agent for approx. 10 years, living in a common-law relationship. All property ownership, including house, vehicles, insurance etc… are solely in the spouse’s name, exclusively.
He wants to claim a % of use-of-home office space and utilities ( all bills are in his spouse’s name only) as business related expenses.
From my understanding of CRA’s business expenses: one can claim such expenses if one owns or rents such properties.
Without going into a lengthy legal debate, would his common-law status automatically define him as part owner of these properties and make them eligible for business claims?
In my limited legal knowledge, I inclined to believe he is not eligible to such claims but viewing some of his previous’ years returns, I see these expenses were claimed and processed.
Your opinion would be welcomed.


#2

I think the question is whether or not he pays his share of the expenses. I highly doubt that his common law spouse just supports him. Although it’s possible. :slight_smile:

You could also let him know that he could potentially run into a problem and have him write a cheque for the expenses every month to cover the issue.

Every province is different in what common-law spouses are entitled to by law and also the amount of time it takes to make that entitlement happen.

If it was my client, I would treat him as if he was any other married client and have the conversation about how the expenses are set up potentially causing an issue. Because CRA can make any judgement it wants really, and then we are left to object to it.

Hope that helps,


#3

Thanks for your valued opinion. In this case there were other background issues impeding an accurate completion of the business return.
Client was declined.