To Deduct or Not to Deduct - That is the Question

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Since it’s tax season we’re breaking down the juicy details of two of our most asked about deductions – work wardrobe and eating out. The decision of whether to deduct these two expenses comes down to very specific circumstances, so read on! 

Work wardrobe

You finally get licensed after years of being a slave to your books and you’re beaming with excitement to get out into the real world and start changing lives. Then it hits you – you’ve been rocking athleisure outfits for the past several years and you have NOTHING to wear to the clinic. Okay, maybe you have 1 or 2 outfits that you passed off as “work appropriate” during your internship – but now you’re ready to step it up! 

We can all relate. No problem a little retail therapy can’t fix (that’s a form of self care, right?). You justify the splurge with the assurance that your new work wardrobe is a work expense and you’ll be able to write it off at tax time (aka get a partial refund). Not so fast.

Your new work wardrobe is usually not considered an acceptable business expense in the eyes of the CRA (Canada Revenue Agency).

Why not? Well, aside from making you feel more confident and help your performance (look good, feel good is a real thing!) it falls under the umbrella of a personal expense. So, you may be wondering, do ANY work wardrobe purchases fall under the umbrella of business expenses?

One great example that comes to mind is a lab coat. This is an acceptable business expense, since you’ll wear it exclusively at work and it's needed to perform your business activities. 

Another example comes from one of our clients. She works as an Acupuncturist in a hospital setting where she's required to wear a specific type of black, covered, rubber, non-slip shoes. She doesn't wear these shoes outside of work. In our opinion, this is an acceptable business expense since it's clearly not a personal expense. 

Eating out 

We’ve all gotta eat – and eating is the priciest when it’s organic, non-GMO, refined sugar free, gluten free and vegan. Worth the investment in our opinion! Being able to consider some of this pricey dining as a business expense would help out in reducing your tax bill, but not all eating out is considered a business expense. 

First – let’s talk about what IS considered a business expense.

Any time you eat out (or drink) and there’s a clear business purpose to your spending, it’s likely considered deductible.

A few scenarios:

  • You get together with a clinic owner for an oat milk latte. She owns a clinic you’re interested in working at, and it’s a low-key interview to get to know each other and understand if you’re a fit. This is a business expense! 

  • You attend a conference on new pain management techniques for the weekend and you eat out several times during the weekend. This is a business expense! 

In each of the above examples there’s a clear business purpose for the outing. 

Now, a few examples that are likely NOT considered a business expense since there is no clear business purpose: 

  • You go to the vegan bakery across the street from your clinic everyday for lunch. This would be considered a personal expense since it’s normal, run-of-the-mill eating out that you’d have to pay for as an employee or self-employed.

  • You have a long day of patients and your morning chaga tea isn’t providing enough energy to keep you going until the end of the day. You step out of the clinic for a quick break and grab an espresso shot at the café across the street. This is not considered a business expense. 

See the difference? In these examples you’re purchasing food (or drinks) for a personal outing and there’s no real business purpose.