Self-Employed? Here’s Every Tax Deduction You Should Know About
Being self-employed in Canada means you’re responsible for tracking your own income and expenses. The upside: you can deduct legitimate business expenses against your income, reducing your tax bill significantly.
Here’s a practical checklist of deductions most self-employed Canadians can claim.
Home Office Expenses
If you use part of your home regularly for business, you can deduct a proportional share of:
- Rent or mortgage interest (interest only, not principal)
- Utilities (heat, electricity, water)
- Home insurance
- Property tax
- Internet
- Minor repairs and maintenance
Calculate the percentage based on the square footage of your workspace relative to your total home. Keep it reasonable and documented.
Vehicle Expenses
If you use your personal vehicle for business, you can deduct the business-use portion of:
- Fuel
- Insurance
- Maintenance and repairs
- Lease payments or capital cost allowance (CCA) if you own the vehicle
- Parking and tolls (business-related)
You must keep a mileage log that records date, destination, purpose, and kilometres for each business trip. CRA takes this seriously.
Professional and Business Fees
- Accounting and bookkeeping fees
- Legal fees related to business
- Professional membership dues
- Business licenses and permits
- Bank fees on business accounts
Office Supplies and Equipment
- Computers, printers, software
- Stationery, ink, paper
- Phone and phone plan (business-use portion)
- Furniture for your workspace
Larger items may need to be depreciated over time using CCA rather than deducted fully in one year.
Advertising and Marketing
- Website hosting and domain fees
- Online advertising (Google Ads, social media)
- Business cards, flyers, signage
- Trade show and conference fees
Travel and Meals
- Business travel (flights, hotels, ground transport)
- Meals with clients or at conferences: 50% deductible
- Meals during overnight business travel: 50% deductible
Keep receipts and note the business purpose for each expense.
Insurance
- Business liability insurance
- Errors and omissions (E&O) insurance
- Business interruption insurance
Subcontractors and Wages
If you hire help, wages and subcontractor payments are deductible. If you pay subcontractors more than $500, you may need to issue T4A slips.
CPP Contributions
As a self-employed person, you pay both the employee and employer portions of CPP. The employer-equivalent portion is deductible on your return (Line 22200).
Common Mistakes to Avoid
- Mixing personal and business expenses. Keep separate accounts and credit cards.
- No mileage log. Reconstructing one at tax time is a red flag for CRA.
- Overclaiming home office. A 60% home office claim on a 3-bedroom house will draw questions.
- Forgetting GST/HST. If gross revenue exceeds $30,000 in any 12 months, you must register.
Want a professional review of your self-employed deductions? Book a free consultation with FinGems.