What Counts as a Business Expense — and What Doesn’t?
Learn which expenses you can deduct in Canada—and which ones you can’t. Save money and stay CRA-compliant by knowing the difference.
💼 What Counts as a Business Expense — and What Doesn’t?
When you're running a business in Canada, every dollar matters. But so does what you claim on your taxes. Not everything you spend is automatically deductible — and misunderstanding the rules can land you in hot water with the CRA.
Here’s a clear breakdown to help you understand what’s legit and what’s not.
✅ Common Deductible Business Expenses:
These are costs directly related to running your business:
* Rent for your office or workspace
* Utilities (electricity, heat, internet)
* Office supplies and software
* Marketing and advertising
* Travel costs for business trips
* Business-related meals (usually 50% deductible)
* Professional fees (accounting, legal, etc.)
* Vehicle expenses (if used for business)
* Wages and salaries
❌ What You Can’t Deduct:
Some things may feel like business expenses but don’t qualify:
* Personal living expenses (e.g. groceries, rent for your home unless it's a home office portion)
* Fines or penalties (CRA or parking tickets)
* Club memberships (like golf or gym, even if networking)
* Clothing (unless it's protective gear for work)
* Travel that’s mostly personal with minimal business activity
💡 Pro Tip:
Keep all receipts, invoices, and records.
If the CRA audits you, clear documentation is your best defense. A spreadsheet, app, or accounting software can help you track everything easily.
