What Business Expenses Are Tax Deductible in Canada?
Discover how to lower your tax bill legally and make smarter business decisions

Running a business in Canada comes with its fair share of costs—but the good news? Many of these expenses are tax-deductible. Knowing what counts as a deductible business expense can help you significantly reduce your taxable income and free up more cash flow to grow your business.

Whether you’re a sole proprietor, consultant, freelancer, or small business owner, this guide will walk you through the most common tax deductions in Canada and how they apply to your business.

✅ What Is a Tax-Deductible Expense?
A tax-deductible expense is a cost that is considered necessary for earning business income. If it’s directly related to your business activities, it’s likely deductible.

📌 Remember: Only the business-use portion of an expense is deductible. Personal expenses are not.

🧾 Common Tax-Deductible Business Expenses in Canada
Here are the most frequently claimed deductions by Canadian business owners:

• Office Supplies
Basic items such as pens, paper, staplers, and ink cartridges are deductible.

• Home Office Expenses
If you work from home, a portion of your rent, utilities, property taxes, and maintenance costs can be deducted.

• Business Use of Vehicle
You can deduct a portion of:

Fuel

Repairs

Lease payments

Insurance

Just make sure to keep a mileage log to track business vs. personal use.

• Professional Services
Fees paid to lawyers, accountants, and business consultants are all deductible.

• Marketing and Advertising
Expenses like:

Google Ads

Website hosting

Social media campaigns

Printed materials (flyers, brochures)
can be written off.

• Meals and Entertainment
You can deduct 50% of meals and entertainment costs when incurred for business purposes (e.g., client meetings, staff lunches).

• Travel Costs
Hotel stays, flights, taxis, and car rentals for business trips are eligible—just keep all receipts.

• Insurance Premiums
Business liability, professional, and property insurance are considered deductible.

• Salaries and Subcontractors
Payments to employees, freelancers, or subcontractors are fully deductible as business expenses.

📊 Business Expense Deduction Table
Here’s a summary of deductible expenses for Canadian businesses:

Expense Category Examples Deductibility Rate
Office Supplies Paper, pens, printer ink 100%
Home Office Rent, utilities, internet (business portion) % based on space
Vehicle Expenses Fuel, insurance, repairs % based on usage
Professional Services Lawyer, accountant, consultant fees 100%
Advertising & Marketing SEO, ads, flyers, website 100%
Meals & Entertainment Restaurant bills with clients 50%
Travel Hotels, airfare, transportation 100% (business-only)
Salaries/Wages Employees, contractors 100%

💡 Bonus Tip: Understand Line 15000 on Your Tax Return
To take full advantage of your deductions, it helps to understand what your total income (Line 15000) means. This line on your tax return includes all sources of income before deductions, and knowing this number is essential when planning your tax-saving strategy.

👉 Check our full guide on Line 15000 on Tax Return Canada to understand how your income impacts your tax liability.
https://sazsquare.com/line-15000-tax-return-canada/

🛠 Pro Tips to Maximize Your Deductions
• Keep Detailed Receipts: Store both digital and paper records
• Track Business Miles: Use an app or manual log for accuracy
• Use Accounting Software: Tools like QuickBooks or Wave help automate categorization
• Consult a Professional: A tax consultant or accountant can spot missed opportunities

Final Thoughts
Claiming the right business expense deductions in Canada can significantly reduce your tax burden. But make sure you’re staying compliant—incorrect claims can lead to audits and penalties.

When in doubt, speak with a business consultant or tax advisor to guide you. The small cost of professional advice could save you thousands in the long run.