With just hours to go before Santa boards his sleigh and sets out on perhaps the world's longest yet fastest business trip, one can only wonder whether he's taken the time to consider the tax implications of his worldwide adventure.
Taxes have become a priority for Mr. Claus ever since Citizenship, Immigration and Multiculturalism Minister Jason Kenney reconfirmed at a citizenship ceremony last year that Santa is, indeed, a Canadian citizen. Referring to his North Pole residency, Mr. Kenney said, "Santa lives in the Arctic North and that is Canadian territory. So when he comes to visit Canadian boys and girls, he doesn't have to go through the CBSA border clearance."
Further evidence of Mr. Kringle's Canadian citizenship include his Canadian postal code (H0H 0H0).
Being Canadian, of course, brings with it a host of tax issues Mr. Claus should review to ensure he doesn't irk the ire of the taxman. Consider, first of all, his transportation. Does he keep a log of all his sleigh's kilometres? If he uses his vehicle partially for business purposes and partially for other purposes, he must prorate his expenses based on the distances driven.
While ideally the Canada Revenue Agency might like to see an accurate logbook of business travel maintained for the entire year which shows the destination, the reason and the distance covered for each trip, last year the CRA introduced a "simplified logbook."
Under this method, after you've kept a full logbook for one complete year (starting in 2009 or later) to establish the business use of a vehicle in what's known as a "base year," in subsequent years a three-month sample logbook can be used to extrapolate business use for the entire year, as long as the business usage is within 10% of the results of the base year.
Next, consider Santa's uniform. As a business owner, Saint Nick should be able to claim tax depreciation for the cost of his red-and-white outfits. Uniforms fall into Class 12 of the Tax Regulations' Capital Cost Allowance Schedule and are therefore eligible for a 100% writeoff.
Perhaps the biggest question, however, is whether Santa can write off the enormous cost associated with producing all those toys given that his "business" may lack the necessary degree of commerciality and might be viewed by the CRA as more of a hobby.
That being said, if we consider that the milk and cookies left for him represent a source of income and that Santa also includes the not insignificant revenues he must earn from department-store appearances and licensing rights to his image, perhaps he does, indeed, run a profitable venture.
Other unanswered questions to ponder this Christmas Eve: Can he claim his elves as dependants? Does he pay Mrs. Claus a reasonable salary, allowing him to income split? What about the costs of the reindeer food?
Wishing all our readers a Merry Christmas and a Happy Hanukkah.