6 Essential Tax Deductions for Canadian Small Businesses
Tax deductions reduce the amount of income you pay tax on. Understanding which expenses qualify can save thousands of dollars.
- Tax deductions reduce your taxable income, not your tax bill directly
- Home office, vehicle, and meal expenses are commonly missed deductions
- Keep detailed records—CRA scrutinizes vehicle and meal claims
- Bad debts can be claimed if unpaid for over a year
Tax deductions (also called "write-offs") reduce the amount of income you pay tax on. If your business earns $100,000 and you have $20,000 in legitimate expenses, you only pay tax on $80,000.
1. Home Office Expenses
If you work from home—even at the kitchen table—you can claim a portion of your household expenses. The amount depends on the percentage of your home used for business.
Mortgage interest, utilities, property taxes, repairs, home insurance, internet, phone, and office equipment.
2. Vehicle Expenses
Using your personal vehicle for business? You can deduct the business portion of fuel, parking, repairs, registration fees, and either capital cost allowance (if owned) or lease payments.
Keep an accurate mileage logbook. Vehicle expenses are heavily scrutinized by CRA, so proper documentation is essential.
3. Business Insurance
Commercial insurance premiums for buildings, equipment, and machinery used in your business are fully deductible.
4. Meals and Entertainment
Taking clients out for dinner or to a sporting event? You can deduct 50% of these costs. Keep all receipts and note the business purpose and attendees.
5. Advertising Costs
Online advertising, website hosting, and domain registration are 100% deductible. Television and radio advertising on Canadian stations is also fully deductible.
6. Bad Debts
If a client owes you money and you cannot collect it within a year, you may be able to claim it as a bad debt.
Maximize Your Deductions
Tax Punjabi can help you identify all eligible deductions and save thousands. Contact us today!