Hello,
I have a question. I do retail arbitrage. When a buyer returns an item to us because it is defective (or damaged), can we put this loss in our taxes?
I am in Canada.
Yes, in Canada, you can deduct the cost of defective or damaged returns as a business expense on your taxes. Since you do retail arbitrage, the cost of these returns would typically be categorized under “cost of goods sold” (COGS) or “business losses.” You should keep detailed records of each return, including receipts, customer return reasons, and any refunds issued, to support your deductions in case of an audit. If the item is unsellable and you dispose of it, it may also qualify as a business loss. It’s best to consult an accountant to ensure you’re properly categorizing these expenses based on your specific situation. Let me know if you need help with record-keeping strategies.
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Yes, you can deduct losses from defective returned items as a BUSINESS EXPENSE. But importantly, you must maintain accurate records of the items including original purchase price, sales price, documentation of the return and evidence of the damages. Also, proper inventory management is important.
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In Canada, businesses can claim tax deductions for losses incurred due to defective or damaged inventory. This means that if a buyer returns an item because it is defective or damaged, you can deduct the loss from your taxable income, thereby reducing your overall tax liability.
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From what I know, in Canada, you can usually write off defective or damaged inventory as a business expense, either under cost of goods sold (COGS) or as a business loss, depending on how you handle inventory accounting. But tax rules can be tricky sometimes.
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Yes, in Canada, you can typically deduct the loss from defective or damaged returns as a business expense on your taxes, provided it’s properly documented. Consult a tax professional for accurate guidance.