Canadian Businesses Expenses & Tax Deductions
This is a general list of deductible business expenses for Canadian small businesses. It's important to remember that Personal expenses are not tax deductible. To avoid mixing of personal and business expenses, it is recommend all small business owners to maintain a separate bank account and credit card for business purposes.
It may be the case that it is difficult to properly split personal and small business expenses for certain expenses (for example, cell phone or internet charges). In those cases, you will need to estimate the percentage of the business portion and apply it to the total amount of the expense.
If the item you're thinking of using as a business tax deduction isn’t on this list, that doesn't mean it’s not a legitimate business expense. The Canada Revenue Agency (CRA) defines a deductible business expense as “any reasonable current expense you paid or will have to pay to earn business income”.
Common Business Expenses
• Accounting & Legal fees (related to business activities)
• Advertising expenses
• Automobile expenses (business use of a vehicle expenses and Capital Cost Allowance deductions on the purchase of a vehicle)
• Bad Debts (moneys owed to you that you are unable to collect)
• Bank Charges
• Business Taxes & Business Licenses
• Cloud Computing Service Provider Fees
• Collection Agency fees
• Conference and Convention fees
• Expert Advice (consultant fees, for instance)
• Interest expenses (on money borrowed to run your business)
• Insurance expenses (for buildings, machinery or equipment)
• Internet Service Provider (ISP) fees (for business use)
• Membership Dues (for business-related organizations, also includes subscriptions to business-related publications)
• Meals and Entertainment expenses
• Office Rent/Lease expenses
• Office Supplies expenses
• Postage & Courier expenses (shipping and delivery)
• Private Health Service Plan (PHSP) premiums - you can deduct PHSP premiums you pay to insure yourself or any member of your household as long as you are actively involved in your business and it provides more than 50% of your total income
• Promotion expenses
• Property Taxes
• Repair & Maintenance expenses
• Salaries of employees
• Business Software (for example, office suites and tax preparation and accounting software)
• Telephone/Telecommunications expenses
• Travel expenses
For more help with determining your business expenses and deductions, planning for taxes, keep records, make and report payments check out the Guide for Canadian Small Businesses from CRA.
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