As many small businesses work to recover and grow from the Covid-19 pandemic, this question arises quite often.  How much and for how long can I write off business losses.  There is no simple answer as there are a number of variables involved.

1. Do you have a clear plan and timeline when the business will be profitable?  CRA will assess your particular situation and advise you on what is acceptable.
2. Do you have a full time job?  CRA may think you are writing off losses in one business to reduce taxes owing on your overall taxes.
3. What are the particular circumstances that you are not profitable.  CRA has experience with various industries and understand which industries and types of products and services take how long to be profitable.

So the answer is not an easy one, however having a professional profit/loss plan will help in the event CRA contacts you.  Writing out a clear, concise plan on when your business will regain profitability will be a critical factor for CRA to continue to allow you to writing off losses in your business.

Learn more by reaching out to Goulet Tax Planning Group at 403-250-2119 or emailing info@goulettaxplanninggroup.com.