What business expenses can self-employed Canadians deduct?

The CRA allows you to deduct any reasonable business expense that was incurred to earn income from your business. The core principle is the expense must be 'ordinary and necessary' for your business. Common deductible expenses on Form T2125 include: **Advertising and marketing**: Website costs, social media ads, business cards, flyers **Business taxes, licenses, and memberships**: Professional association fees, CRA business registration fees **Vehicle expenses**: Fuel, insurance, repairs, parking, lease payments — for the business-use portion **Telephone and internet**: Business-use portion of phone and internet bills **Office expenses**: Stationery, postage, printer ink, small office supplies **Professional fees**: Accountant, lawyer, bookkeeper fees for business purposes **Rent**: Office, studio, or workspace rental costs **Salaries and wages**: If you employ others **Insurance**: Business liability insurance, professional indemnity **Interest and bank charges**: Business loan interest, bank account fees **Travel**: Business-related flights, trains, accommodation — with proper documentation **Education and training**: Courses and training directly related to your current business Personal expenses are never deductible. Mixed-use expenses (e.g., a mobile phone used for both work and personal) must be prorated to the business-use portion.

  • Expense must be incurred to earn business income — personal expenses never deductible
  • Mixed-use expenses (phone, internet, car) are split: claim business-use portion only
  • All expenses reported on Form T2125
  • Keep receipts for every expense — CRA can audit up to 6 years back
  • Capital assets (equipment) claimed via CCA (depreciation) rather than as expenses

Related Questions

  • What is Form T2125 and what does it cover?
  • How do I claim home office expenses in Canada?
  • How do I claim vehicle expenses as a self-employed Canadian?
  • What is Capital Cost Allowance (CCA) and how do I claim it?