Why does my refund drop with more business expenses?

colloc · ‎October 29, 2019

I am filing my taxes as a self employed individual, and I ran into a strange situation. I entered my income off my T4A, then included my medical expenses from the year and I had a refund owing at that point. Once I entered in my business expenses though, my refund dropped to 0. Shouldn't I qualify for more of a refund when my income is lowered by expenses, not less? I would be better off not claiming any business expenses as is, so it seems like I am missing something important. Any help or information is appreciated.

mohdpk · ‎October 29, 2019

Generally, refund is calculated when tax deducted at source is more than tax payable, if there is no tax deducted , you may be eligible for refundable tax credit such Working Income Tax Benefit, a benefit paid to low income taxpayers if income falls within certain limits, there are not many refundable tax credits now a days

In your situation, it can happen if your income was within threshold before entering expenses so you were eligible for credit and after entering expernses , you are out of that threshold, this is one of the possibilities to see detail of this credit , see link below

http://www.cra-arc.gc.ca/bnfts/wtb/menu-eng.html

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Why does my refund drop with more business expenses?

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