Recommendation - It is suggested that SGF focuses on reducing food waste as this is their first
year of operations. The company also has donations from 6 individuals pending to be used
towards the opening of new stores. Their primary focus should be directed towards their current
mission statement. Expanding into a different area, such as clothing, should be a consideration
once the company is established and new strategic objectives can be considered once research
can be performed.
Home Office Expenses
As per ITA 18 (12) Home office expenses can be deducted if the space is:
the individual's principal place of business, or
used exclusively for the purpose of earning income from business and used on a regular
and continuous basis for meeting clients, customers or patients of the
respect of the business;
As you spend 25 out of the 40 hours (i.e 63%) in the week doing admin work at home, this space
can be considered your principal place of business.
Exhibit 3 calculates the expenses that are deductible as an employee. Property taxes, home
insurance, mortgage interest, CCA, phone and interest are not deductible for employees. Only
long distance phone calls are eligible for deduction that are placed for business purposes.
The maximum home office deductions are limited to income for tax purposes, which is $1,000.
Therefore, the home office deduction is $1,000, instead of the calculated amount of $1,080. $80
can be carried forward and used in subsequent years.
The term deposit is the lowest risk option as the principal investment will never decrease. Low
risk also results in low returns. The prime minus 1.5% interest can result in a slow growth for the
investment, and potentially zero growth if the prime rate is also 1.5%. The fixed term also
restricts access to funds, which can negatively impact expansion opportunities and cash flows.
This option is also low risk as principal will never decrease, only interest will be earned at a low
rate of 1%. The benefit of this investment option is easy access to cash when required.
Equity Mutual Fund
This option provides a higher level of risk as the principal amount of the investment is not
protected. Although the return is appealing, there is potential to lose a significant amount of cash.
A positive aspect of this option is the ability to withdraw cash as required.