As a self-employed Canadian, you can deduct any expense that is reasonable, incurred to earn business income, and not personal in nature. This guide covers the most common deductible expenses, the rules around each, and what documentation the CRA expects.
The Core Rule
CRA allows you to deduct expenses that are both:
- Incurred to earn business income — there must be a clear business purpose
- Reasonable in the circumstances — the amount must be consistent with what a business would normally spend
Personal expenses are never deductible, even if you paid for them. Mixed-use expenses (partly business, partly personal) are deductible only for the business portion.
Common Deductible Expenses
Software and Subscriptions
Software you use to run your business is fully deductible: accounting software (FreshBooks, QuickBooks, Wave), design tools (Adobe Creative Cloud), project management (Notion, Asana), video conferencing (Zoom), cloud storage, and professional email. Annual subscriptions are expensed in the year paid.
Home Office (Business-Use-of-Home)
If your home is your principal place of business — you do more than 50% of your work from home — you can deduct a proportional share of home expenses. Calculate using square footage: office area ÷ total home area = business percentage. Apply this percentage to rent (or mortgage interest, not principal), utilities, property tax, home insurance, and maintenance costs.
This deduction cannot create a net business loss — any excess carries forward.
Internet and Phone
The business portion of your internet and phone bills is deductible. Internet: claim 50–100% depending on business vs personal use (most work-from-home freelancers claim 50%). Phone: claim the business-use percentage. Keep monthly bills as receipts.
Professional Development
Courses, workshops, webinars, conferences, and books directly related to your field of self-employment are deductible. A copywriter deducting a writing course is clearly justified. The same person deducting a cooking class is not.
Professional Fees
Accounting fees, legal fees for business contracts, and fees paid to other professionals (graphic designers, subcontractors) for work on your projects are all deductible on line 8860.
Business Insurance
Professional liability (E&O) insurance, commercial general liability, and any other business-specific insurance premiums are fully deductible.
Advertising and Marketing
Website hosting, domain name registration, Google Ads, LinkedIn promoted posts, business cards, portfolio hosting fees — all deductible. Your own website is a deductible business expense.
Meals and Entertainment
50% of the cost of meals with a legitimate business purpose (client meeting, working lunch with a collaborator) is deductible. Keep receipts noting the business purpose and who was present. The CRA disallows 100% meal claims — the software applies the 50% automatically when you enter the amount on line 8523.
Travel
Business travel — flights, hotels, ground transportation — for work purposes is deductible. If a trip combines business and personal components, only the business portion is deductible. Keep boarding passes and itineraries.
Vehicle Expenses
If you use your personal vehicle for business, you can deduct the business-use percentage of all vehicle costs: fuel, insurance, maintenance, registration, and lease payments or CCA on a purchased vehicle. Requires a mileage logbook showing date, destination, business purpose, and km driven for each business trip.
Capital Cost Allowance (CCA)
Major purchases (computers, equipment, furniture) are generally not expensed entirely in the year of purchase — they are capitalized and depreciated over time using CRA’s CCA rates. A laptop (Class 10 or 50 — 55% declining balance rate for most computers) would be depreciated rather than deducted as a current expense. Your tax software handles CCA calculations; enter the asset in Part 8 of T2125.
Common CRA Audit Triggers for Self-Employed Expense Claims
- Claiming 100% of a home office when the space is shared with personal use
- Claiming 100% of meal costs without applying the 50% rule
- Deducting a home internet plan without reducing for personal use
- Claiming vacations as business travel without a clear business component
- Business-use-of-home claims in a rented property where the lease doesn’t permit business use
Frequently Asked Questions
Can I deduct clothing or a work wardrobe?
Generally no. The CRA considers clothing to have personal benefit and disallows clothing deductions for most workers. The exception: protective or specialized clothing required specifically for the work and unsuitable for everyday wear (safety equipment, uniforms, specialized technical gear). A consultant buying a suit for client meetings cannot deduct it.
Can I deduct my laptop if I also use it personally?
Yes, but only the business-use portion. If you estimate 80% business use, you can claim 80% of the depreciation (CCA). You must have a reasonable basis for the split. A laptop you use 8 hours per day for client work and occasionally for personal streaming has a strong business-use argument.
Do I need to keep all receipts?
Yes. The CRA requires you to keep records supporting all deductions for 6 years from the end of the tax year to which they relate. In a CRA audit, you will need to produce receipts for any expense you claimed. Electronic receipts (PDFs, email confirmations) are acceptable.