What are common expenses that are not deductible for tax purposes for corporations?

Corporations should be careful in their accounting for expenses that may not be deductible for tax purposes. It would be wise to set up separate accounts for such types of expense. Below, are a few examples of non-deductible expenses:

1. A corporation may incur legal fees in the normal course of their operation, but some legal fees cannot be expensed for tax purposes. If there are legal fees incurred in the process of obtaining financing, that expense is actually not deductible immediately, but is expensed over the course of five years.
2. Another example is interest expense. Corporations who tangle interest expense on late corporate tax payments with other interest expenses should separate the two. This is because the interest incurred on late tax payments is not deductible.
3. Meals and entertainment expenses are only 50% deductible.
4. Payments made on a life insurance policy are usually not deductible.
5. Golf dues and membership fees paid to a golf club are non deductible.
6. Payments made for memberships in sports clubs and recreational facilities are non deductible.
7. Business clothing is a non deductible expense, unless you are wearing a company uniform.
8. Personal expenses that are not related to your corporation’s business activities are non-deductible.

ABOUT THE AUTHOR

ALLAN MADAN

CA.CPA.CGA

Allan Madan is a CPA, CA and the founder of Madan Chartered Accountant Professional Corporation. Allan provides valuable tax planning, accounting and income tax preparation services in the Greater Toronto Area.

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