So, all I would have to do is sell one toy and I could write off all of my other expenses (i.e. purchases)?
Believe it or not...........YES!
Revenue Canada's own literature states......
"that any endeavour with a reasonable expectation of profit can be considered to be a business.". Get a Rev Can business tax guide and read the opening pages. The info there is, for all intents and purposes, the law and tax code as they operate by.
Revenue Canada does NOT specifically define what "a reasonable expectation of profit" is though, so one can actually incur a loss.
If you show a pattern of conduct that shows you are at least TRYING to gain a profit, that satisfies the requirement, and entitles you to deduct business expenses.
Heck, they do not even define a business in an specific way, other than the general terms of someone creating a product for sale or providing a service.
Both parts of this have such wide interpretation and context that, yes......you can legally do just what you described above.
If you can show, within reason, that the items you buy apply
in some way to your business, then those items become legit deductible expense--because they further your business.
For example: because I'm a cartoonist, I sometimes legitimately use my action figures as life-drawing models--to pose out actions for characters drawn on paper.
That simple use means they serve a function in my work, and I can then write the cost of them off as a business.
Since there is no official definition or interpretation of how I do my work, my reasons stand.
Someone selling items on Ebay could claim the toys they buy and write off are "sales samples" used to check the quality of good prior to offering them for auction. Since they might offer only a select kind of goods ( pose-able action figures), they have need to describe those toys specifically and fully to their clients. That can only be done by purchasing them to see firsthand.
Revenue Canada says little about usage of business expense items--mostly because such usage covers a extremely wide definition. So, you might only "use" the item you buy one-time, or use it constantly......but you gain the deduction for it either way, subject to whatever limits MIGHT be imposed.
An accountant can supply you with more detailed info on this, and consulting same would probably be a smart idea, because doing so only once would gain you info that can apply for years down the road. I have personally written off tens of thousands of dollars worth of my collection over the past 20 years at least, and done so legally and without question.
