What Are the Tax Write-Offs for Self-Employed Canadians?

September 22, 2026 · 12 min read

A tax write-off is a business expense subtracted from your income before tax is worked out. For a self-employed Canadian, the CRA's rule is one sentence: "as a rule, you can deduct any reasonable current expense you incur to earn income." Personal spending is out, and lasting assets are deducted over several years instead.

General information for tax year 2025, not tax advice. We do not file your tax returns, and we do not give tax, legal or financial advice. Confirm your own situation with your accountant or the Canada Revenue Agency.

This page is written for sole proprietors and partners, who report business income and expenses on Form T2125. Corporations file a T2 return and claim differently; the CRA's T2 Corporation Income Tax Guide for 2025 covers them.

Every rule below comes from a canada.ca page, and the wording that decides a claim is quoted rather than summarised, because on this subject a paraphrase is where the errors creep in.

The common write-offs at a glance

All of the above as at tax year 2025.

What makes an expense a write-off

Three words carry the whole test: reasonable, current, and to earn income. An expense that fails any one of them cannot be deducted as a current expense, however business-like it feels at the till.

The CRA's own wording runs, in full: "You cannot claim expenses you incur to buy capital property. However, as a rule, you can deduct any reasonable current expense you incur to earn income" (Business expenses, tax year 2025). "Current" means the kind of cost that recurs; buying something that lasts is handled differently, and it has its own section further down.

The personal line is drawn just as plainly. The same page says that "since you cannot deduct personal expenses, enter only the business part of expenses" on your form. A phone shared between the business and the family is only partly a write-off — and the split has to be one you could defend if asked.

One detail matters for anyone registered for GST/HST. The CRA says "The deductible expenses include any goods and services tax / harmonized sales tax (GST/HST) you incur on these expenses minus the amount of any input tax credit claimed." In plain terms, the sales tax you get back as an input tax credit cannot also be deducted as part of the expense. Claiming it both ways would count the same tax twice. How input tax credits work is covered in our GST, PST and HST guide.

A write-off is not a tax credit

The two are easy to confuse, and they work in different places on the return.

A deduction comes off your income. The CRA's own teaching material puts it simply: "Deductions are certain expenses and other amounts that you subtract from your total income or your net income when you fill out your income tax and benefit return." And because tax is calculated on income, "deductions reduce the amount of tax that you may have to pay" (Completing a basic tax return).

A credit comes off the tax itself. Finance Canada describes the common kind this way: "Most tax credits are non-refundable and reduce the amount of tax an individual owes, up to the point that the individual no longer owes tax" (Finance Canada, report on non-refundable tax credits).

That difference decides what a write-off is worth to you. The same report contrasts credits with "tax deductions, which reduce taxable income and therefore provide greater tax savings to individuals with higher marginal tax rates." Read within that report's own scope, which is individual taxpayers: a write-off is worth more the higher your marginal rate. Which rate applies to you is a question for your accountant; this page deliberately quotes none.

Everyday running costs: rent, phone, bank fees and supplies

The everyday write-offs are dull, frequent and easy to lose track of.

Rent. The rule is short: "You can deduct rent incurred for property used in your business." The one exception matters for anyone working from home. The CRA says rent "related to business use of workspace in your home has to be claimed as business-use-of-home expenses" — a different calculation with its own limits.

Phone, internet and utilities. The CRA allows "expenses for telephone, cellphone, and utilities (such as gas, oil, electricity, water, and cable), if you incurred the expenses to earn income." The last clause does the work. A plan used for both is split, and only the business part goes on the form.

Bank charges. The CRA allows "management and administration fees, including bank charges, incurred to operate your business," and it adds that "Bank charges include those for processing payments." Payment-processing fees belong here. Interest has its own limits, and the CRA draws one firm line: "Do not deduct interest on money you borrowed for personal purposes or to pay overdue income taxes."

Office expenses. "You can deduct the cost of office expenses," and the CRA's examples are small items: pens, pencils, paper clips, stationery, stamps. Calculators, filing cabinets, chairs and desks are excluded, because "These are capital items." That distinction comes back in the section on big purchases below.

Professional fees. The CRA allows "the fees you incurred for external professional advice or services, including consulting fees," and says "You can also deduct fees you incur for preparing and filing your income tax and GST/HST returns." The bookkeeper and the accountant are both write-offs; what a bookkeeper does is covered in its own guide.

Working from home

A home workspace comes with conditions. It qualifies only if one of two things is true: "it is your principal place of business", or "you use the space only to earn your business income, and you use it on a regular and ongoing basis to meet your clients, customers, or patients" (Business-use-of-home expenses, tax year 2025).

What you claim is a share of the household's costs, not the whole bill. "You can deduct part of your maintenance costs such as heating, home insurance, electricity, and cleaning materials." A renter can claim the matching part of the rent. The CRA's method for the share: "use a reasonable basis, such as the area of the workspace divided by the total area of your home."

Then there is the ceiling. Home-office costs "cannot be more than your net income from the business before you deduct these expenses" — in the CRA's own words, "you cannot use these expenses to increase or create a business loss." A quiet first year does not waste the claim, though. "In your next fiscal period, you can use any expense you could not deduct in the current year," provided the workspace still meets one of the two conditions.

Your vehicle

The starting point is broad: "You can deduct expenses you incur to run a motor vehicle you use to earn business income" (Motor vehicle expenses, tax year 2025).

The practical question is always how much of the vehicle's use was business. The CRA's vehicle pages work through exactly that. One covers calculating your business portion of motor vehicle expenses. Another covers how to record your expenses, with a full or simplified logbook. A car that does both the school run and the client visits is split between them, and the logbook turns that split from a guess into a record.

Buying the vehicle is a separate matter from running it. The CRA's classes of depreciable property say Class 10 "also includes motor vehicles, as well as some passenger vehicles" (Classes of depreciable property, tax year 2025), so the purchase is claimed through capital cost allowance, covered under big purchases below.

The people you pay

Wages for staff are a write-off. The CRA says "You can deduct gross salaries and other benefits you pay to employees."

Whether someone you pay is an employee or self-employed is not a matter of preference. When either side is unsure, the CRA's page says "either of you can ask the CRA for a CPP/EI ruling to have the status determined."

Meals and entertainment: the 50% rule

This is the category with the most arithmetic in it. The CRA's rule is that "The maximum amount you can claim for food, beverages and entertainment expenses is 50% of the lesser of the following amounts": what you actually spent, and "an amount that is reasonable in the circumstances" (Business expenses, tax year 2025).

There are exceptions. A restaurant or hotel that sells food to its customers is outside the limit, and so are costs you bill to a client and show on the bill, along with certain employee situations and fund-raising events held mainly for a registered charity. The same limit also follows you onto travel meals and conference food. Alcohol is a beverage, so it sits inside the same 50%. The full working, exceptions included, is in our guide to whether you can write off alcohol as a business expense in Canada.

Big purchases are not written off in one year

A laptop, a van, a set of shelving or a renovated storefront does not come off your income all at once. The CRA's line: "You cannot claim expenses you incur to buy capital property." Instead, "you can deduct their cost over a period of several years. This yearly deduction is called a capital cost allowance (CCA)" (Claiming capital cost allowance, tax year 2025).

The test for which side of the line a cost falls on starts with the benefit it buys; the CRA weighs the cost's value only when the other tests cannot decide it. "A capital expense generally gives a lasting benefit or advantage," while "A current expense is one that usually recurs after a short period" (Current or capital expenses, tax year 2025). The CRA's own example makes it concrete: "the cost of putting vinyl siding on the exterior walls of a wooden house is a capital expense," but "the cost of painting the exterior of a wooden house is a current expense."

Repairs follow the same logic. On the CRA's chart, "An expense that simply restores a property to its original condition is usually a current expense," while a repair that improves it beyond its original condition is probably capital.

What is not a business write-off

Some costs feel deductible and are not. The CRA names several directly on its business-expenses page:

• Personal spending, or the personal part of a mixed expense — the rule quoted near the top of this page.
• Club dues where the club is mainly for dining, recreation or sport. The CRA says "You cannot deduct club membership dues (including initiation fees) if the main purpose of the club is dining, recreation, or sporting activities."
• Most life insurance premiums. "In most cases, you cannot deduct your life insurance premiums," with a narrow exception for a policy used as collateral for a business loan.
• Your own labour. When you repair business property yourself, the CRA lists "the value of your own labour" among the things you cannot deduct.
• Capital purchases in the year you make them, covered in the previous section.

Personal amounts such as medical expenses are a different part of the return altogether. Finance Canada lists the "Medical Expense Tax Credit" among the non-refundable tax credits, which means it reduces the tax an individual owes rather than coming off business income. It is not a business write-off, and this page does not go further into it.

The records behind every claim

A write-off is only as good as the paper behind it. The CRA's wording is not advisory: "You are required by law to keep records of all your transactions to be able to support your income and expense claims" (Business records, tax year 2025).

And those records have to outlast the return. "You are generally required to keep your records for a minimum of six years from the end of the last tax year to which they relate." The six years run from the end of the tax year the record relates to, not from the date on the receipt.

A claim is only as strong as what backs it. A card-statement line with no receipt shows that you paid, not what you bought. The same gap opens with a home-office share nobody wrote down, or a vehicle claim with no log. What the CRA accepts as a record, and what an audit actually asks to see, is set out in our guide to CRA bookkeeping requirements.

How an expense is recorded on the Bookkeeping Service

Two of the problems above are mechanical: sales tax left inside the cost, and a charge with no receipt behind it. On the Bookkeeping Service, each document goes through extraction, then the accounting treatment, with sales tax separated from the expense. The sales tax is therefore not buried inside the cost that is recorded.

Some bank lines are not expenses at all. Paying a credit-card bill from the chequing account is a transfer between two of your own accounts. Treated as an expense, it inflates your costs and understates what you still owe. And when a charge appears before its receipt does, it is not left uncategorized. The expense is recorded and flagged as waiting for its document, then updated when the receipt finally appears.

None of that decides what you are entitled to claim. What it produces is the record — kept current, with the sales tax separated — that your accountant works from when they do.

Frequently asked questions

What can you write off as a business owner? Any reasonable current expense you incur to earn business income, less the personal part. Capital purchases are deducted over several years as capital cost allowance instead of in the year you buy them.

Can I write off meals as a business expense in Canada? Usually at 50% — of the lesser of what you spent and a reasonable amount. Alcohol on a business bill is inside the same limit.

Can I write off my car for business? You can deduct the costs of running a vehicle you use to earn business income, for the business portion only. A logbook is how that portion is shown.

Can I write off my home office in Canada? Yes, if it is your principal place of business or used only for the business to meet clients regularly. The claim is a reasonable share of household costs and cannot create a business loss.

What business expenses are not deductible? Personal spending, club dues for dining or recreation, most life insurance premiums and the value of your own labour, among others. Capital purchases are not deducted in the year you make them.

How much of my phone bill can I claim? The part incurred to earn business income. A plan used for both business and personal calls is split, and only the business share is claimed.

When you would rather not sort the receipts yourself

Everything above depends on a record kept as the year goes: each expense entered, its sales tax separated, its receipt kept with it. That is the part of the year that can be handed over.

The Bookkeeping Service keeps the books through the year and produces the reports behind a filing; the filing itself is yours or your accountant's. We do not file your tax returns, and we do not give tax, legal or financial advice. What you owe, and what you claim, stays between you and your accountant.

Published by Time2Win Inc.