Top 10 Tax Deductions for Small Business Owners in Canada (2025 Update)
Running a small business in Canada? Then you know how important it is to hold on to every dollar you earn. The good news is, the CRA offers a variety of tax deductions that can significantly lower your taxable income — if you know what to claim.
Home Office Expenses
If you run your business from home, you can deduct a portion of your household expenses like:
– Utilities (heat, electricity, water)
– Rent or mortgage interest
– Property taxes
– Internet
– Home insurance
To qualify, you must use your home workspace either as your principal place of business or to meet clients regularly.
Business Use of Vehicle
If you use your vehicle for business, you can deduct related expenses like:
– Gas
– Insurance
– Lease payments
– Maintenance
– Parking and tolls
Keep a detailed mileage log to separate business from personal use.
Advertising and Marketing
Advertising costs are fully deductible. This includes:
– Online ads (Google, Facebook, Instagram)
– Flyers, brochures, business cards
– Website development and SEO services
– Branding and graphic design
Just make sure the advertising is targeted to the Canadian market.
Professional Services
Fees paid to accountants, lawyers, consultants, and other professionals who support your business are deductible. This includes:
– Tax preparation
– Legal advice
– Business consulting
Office Supplies and Expenses
You can deduct:
– Pens, paper, printer ink
– Software subscriptions
– Postage and courier services
– Bank fees
Basically, any day-to-day cost for running your operations.
Salaries, Wages, and Contractor Fees
If you pay employees or subcontractors, those costs are deductible. This includes:
– Gross salaries
– Employer CPP and EI contributions
– Bonuses
– Contractor invoices (with proper receipts)
Just ensure T4s or T5018s are issued where applicable.
Meals and Entertainment (50%)
You can deduct 50% of meal and entertainment costs related to business activities. This includes:
– Client meals
– Networking events
– Coffee shop meetings
Always keep receipts and note the purpose of the meal.
Travel Expenses
Going out of town for business? You can deduct:
– Flights, trains, taxis
– Hotels
– Meals (50%)
– Conference and event fees
Only claim travel that is 100% business-related.
Capital Cost Allowance (CCA)
When you buy major assets for your business (computers, furniture, vehicles), you can claim a portion of the cost each year as depreciation. This is known as CCA and can provide long-term tax relief.
Bad Debts
If you included income that a client later failed to pay, and you can prove it’s uncollectible, you can write off that amount as a bad debt deduction.
Maximize Your Tax Savings with NRK Accounting
Navigating these deductions takes time, records, and strategy. At NRK Accounting, we specialize in helping Canadian small business owners make the most of every dollar earned.
We’ll make sure:
– You’re claiming everything you’re entitled to
– Your records are CRA-proof
– You stay compliant and stress-free
Book a free consultation today and discover how much you could be saving on your taxes.