The inclusion rate increases to 40% in the second tax year that starts after March 21, 2017, 60% in the third year, 80% in the fourth year, and 100% in the fifth and all subsequent tax years.įor more information, see Guide T4002, Self-employed Business, Professional, Commission, Farming, and Fishing Income. Generally, for the first tax year that starts after March 21, 2017, you must include 20% of the lesser of the cost and the fair market value of WIP. If you elected to use billed-basis accounting for the last tax year that started before March 22, 2017, the transitional rules allow you to include your WIP into income progressively. However, if you have a tax year that begins after March 21, 2017, you can no longer elect to exclude amounts for WIP. Work-related meals can qualify as a business expense. If you have a professional practice and you are an accountant, dentist, lawyer, medical doctor, notary, veterinarian, or chiropractor, you can elect to exclude your work-in-progress (WIP) when you determine inventory. Plus, it can make tax filing easier because depreciation is a tax-deductible business expense. Inventory is used to calculate the cost of goods sold and net income on Form T2125, Statement of Business or Professional Activities. If you are a manufacturer, this includes raw materials as well as packaging material and supplies, work-in-progress (goods and services that you have not yet completed at the end of your fiscal period), and finished goods that you have on hand.

This is usually a list of goods held for sale.

List of business expenses for taxes