Why Business Deductions Matter

Business deductions reduce your taxable income, which directly lowers the amount of tax you owe. Many small business owners miss out on valuable deductions simply because they don't know what's eligible. Understanding these deductions can save you thousands of dollars annually.

1. Home Office Expenses

If you work from home, you can deduct a portion of your home-related expenses based on the square footage used exclusively for business.

Eligible Expenses:

• Rent or mortgage interest (proportional)
• Property taxes
• Home insurance
• Utilities (electricity, heat, water)
• Maintenance and repairs
• Internet and phone (business portion)

Example: If your home office occupies 10% of your home's total square footage, you can deduct 10% of eligible expenses.

2. Vehicle Expenses

If you use a vehicle for business purposes, you can deduct related costs based on the percentage of business use.

Deductible Costs:

• Fuel and oil
• Insurance
• License and registration fees
• Maintenance and repairs
• Lease payments or capital cost allowance (depreciation)
• Parking fees for business purposes

Important: Keep a detailed mileage log showing business vs. personal use. CRA requires documentation.

3. Advertising and Marketing

All costs related to promoting your business are fully deductible.

• Online advertising (Google Ads, Facebook Ads)
• Website development and hosting
• Business cards and brochures
• Sponsorships and promotional events
• Social media management tools
• Professional photography/videography for marketing

4. Professional Fees

Fees paid to professionals for business services are deductible.

• Accounting and bookkeeping fees
• Legal fees (for business matters)
• Consulting fees
• Professional membership dues
• Business license and permit fees

5. Office Supplies and Equipment

Supplies (Fully Deductible):

• Stationery and postage
• Printer ink and paper
• Cleaning supplies for office
• Coffee and snacks for the office

Equipment (Capital Cost Allowance):

• Computers and laptops
• Office furniture
• Printers and scanners
• Software and subscriptions
• Tools and equipment specific to your trade

6. Business Insurance

All business-related insurance premiums are deductible:

• General liability insurance
• Professional liability (errors & omissions)
• Commercial property insurance
• Business interruption insurance
• Workers' compensation insurance

7. Salaries and Benefits

Wages paid to employees and contractors are fully deductible, including:

• Salaries and wages
• Bonuses and commissions
• Employee benefits (health insurance, pension contributions)
• Employer's share of CPP, EI, and payroll taxes
• Training and professional development for employees

8. Business Meals and Entertainment

Meals and entertainment expenses with clients or employees are 50% deductible.

Eligible Expenses:

• Client meals and meetings at restaurants
• Office holiday parties and team events
• Business conference meals
• Entertainment for clients (golf, events, etc.)

Tip: Keep receipts and note the business purpose and attendees.

9. Business Travel

Travel expenses for business purposes are fully deductible:

• Airfare and train tickets
• Hotel accommodations
• Rental cars and taxis
• Meals while traveling (50% deductible)
• Conference registration fees

10. Rent and Utilities

If you rent commercial space, all rent and utility costs are deductible:

• Office or retail space rent
• Storage facility rental
• Electricity, water, and heating
• Property taxes (if applicable)

11. Bank Fees and Interest

Financial costs related to your business are deductible:

• Business bank account fees
• Credit card processing fees
• Interest on business loans
• Interest on business credit cards
• Merchant services fees

12. Bad Debts

If you've made a reasonable effort to collect unpaid invoices and cannot recover the amount, you can write off bad debts.

Common Mistakes to Avoid

• Mixing Personal and Business: Use separate accounts and credit cards for business
• Poor Record-Keeping: Save all receipts and invoices
• Forgetting Small Expenses: Even small purchases add up
• Not Claiming Home Office: Many entrepreneurs miss this valuable deduction
• Claiming Ineligible Expenses: Personal expenses are not deductible

Documentation Best Practices

• Keep receipts for all business expenses (digital or paper)
• Maintain a detailed mileage log for vehicle expenses
• Document the business purpose of meals and entertainment
• Use accounting software to track income and expenses
• Retain records for at least 6 years (CRA requirement)

Maximize Your Deductions

Taking advantage of all eligible deductions requires careful tracking and organization throughout the year. Working with a professional accountant ensures you don't miss valuable savings opportunities while remaining compliant with CRA regulations.