# Self-employed tax deductions in Canada: the full list, and the receipts behind each one

> Self-employed Canadians can deduct any reasonable expense incurred to earn business income, reported on Form T2125. The common ones are advertising, office supplies, software, phone and internet, professional fees, insurance, bank charges, travel, the business share of vehicle and home-office costs, and 50% of meals and entertainment. Equipment such as computers is deducted over several years through capital cost allowance. Personal expenses are never deductible, and every claim needs a receipt kept for six years.

Source: https://simpleloonie.ca/guides/self-employed-tax-deductions-canada
Published: 2026-09-26 · Last reviewed: 2026-09-26

## Key facts

- **Form:** T2125, with your T1 return
- **General test:** Reasonable, and incurred to earn business income
- **Meals and entertainment:** 50%
- **Vehicle and home office:** Business-use share only
- **Computers and equipment:** Over several years, through CCA
- **Records:** Receipts kept six years

## What can a self-employed person deduct in Canada?

Any expense that is reasonable in amount and incurred to earn income from your business. That single test is the whole rule; everything else is a limit on how much of a particular kind of expense counts. There is no approved list you have to be on, and no minimum income before you can claim.

What you cannot deduct is anything personal — your own groceries, clothing you could wear anywhere, commuting to a regular workplace, personal fines and penalties — or the capital cost of long-lasting assets all at once. Mixed-use costs, like a phone or a car, are deductible in proportion to business use.

## Which business expenses can I claim?

*Common self-employed deductions, their limits, and the T2125 line*
| Expense | How much | T2125 line |
| --- | --- | --- |
| Advertising and marketing, website hosting, business cards | In full | 8521 |
| Meals and entertainment with clients | 50% | 8523 |
| Business insurance | In full | 8690 |
| Bank charges, card processing fees, business loan interest | In full | 8710 |
| Business licences, professional dues, memberships | In full | 8760 |
| Office supplies and stationery | In full | 8810, 8811 |
| Accounting, bookkeeping and legal fees | In full | 8860 |
| Rent for business premises | In full | 8910 |
| Repairs and maintenance | In full | 8960 |
| Wages paid to employees | In full | 9060 |
| Business travel: flights, hotels, taxis | In full; meals on the trip 50% | 9200 |
| Phone and internet | Business-use share | 9220 |
| Shipping and courier | In full | 9275 |
| Software subscriptions and other costs | In full | 8810 or 9270 |
| Vehicle running costs | Business-use share | 9281 |
| Computers, furniture, tools, vehicles | Over several years | 9936 (CCA) |
| Home office | Business-use share, cannot create a loss | 9945 |

The limits in the middle column are where most errors happen. The table is a map; each of the harder rows has its own guide on this site with the detail and the CRA source.

## Which deductions have special limits?

- Meals and entertainment: generally 50%, including the tip and tax, with narrow exceptions such as up to six all-staff events a year.
- Vehicle: the business-use percentage from a mileage log, applied to fuel, insurance, repairs, licence, interest and lease costs. Parking for a business trip is deductible in full.
- Home office: only if the space is your principal place of business or used exclusively and regularly to meet clients, and the claim cannot create or increase a loss.
- Capital purchases: computers, furniture, tools of $500 or more and vehicles are claimed through capital cost allowance over several years, not in full.
- Phone and internet: the business share of a plan you also use personally.

## Which deductions do self-employed people most often miss?

- Card processing and payment platform fees, which never arrive as a receipt and sit only in a statement.
- Foreign-currency software and advertising, billed in US dollars and forgotten because the receipt went to an inbox, not a wallet.
- Professional dues, licences and the accountant's own fee for preparing the business return.
- Parking for client visits, paid by app and never printed.
- The business share of the phone plan and home internet.
- Small tools and supplies bought with cash at a hardware store, where the paper receipt fades first.

What these have in common is that the receipt is easy to lose, not that the rule is hard. The fix is a habit, not a tax strategy: capture every receipt the day it arrives, including the PDF ones in your inbox.

## Do I deduct expenses with or without the GST/HST?

If you are registered for the GST/HST, you claim the sales tax back as an input tax credit, so the deductible expense is the amount before tax. If you are not registered, the tax is part of the cost and the whole amount is the expense. Either way, record the tax on each receipt as its own number, because a total cannot be split afterwards.

## What records do I need to support my deductions?

A receipt or invoice for every expense, showing who you paid, when, how much and what for, plus the GST/HST details once a purchase reaches the CRA's thresholds. Keep them for six years from the end of the tax year. A bank or card statement shows that money moved, not what it bought, so it does not support a deduction on its own.

SimpleLoonie is built for this part. Photograph or upload each receipt and the AI reads the vendor, date and total, records GST, HST, PST or QST separately, converts USD receipts to CAD at the transaction-date rate, and sorts the expense into your categories — which you can name after the T2125 lines. At year end the export is totalled by category, with every receipt image attached. It does not decide what is deductible; that stays with you and your accountant.

## Frequently asked questions

### What can I write off as self-employed in Canada?

Any reasonable expense incurred to earn business income: advertising, supplies, software, phone and internet, professional fees, insurance, bank charges, travel, and the business share of vehicle and home-office costs. Meals and entertainment are generally 50% deductible, and equipment is deducted over several years through capital cost allowance.

### Can I deduct my phone bill if I am self-employed?

Yes, the business-use share of it. If a phone is used for both business and personal calls, deduct the proportion that reasonably relates to the business on line 9220 and be ready to explain how you worked it out.

### Can I deduct clothing as a self-employed person?

Generally not. Clothing suitable for everyday wear is a personal expense even if you only wear it for work. Protective gear, uniforms and costumes that are not suitable for personal use are the usual exceptions.

### Do I need receipts for every business expense?

Yes. You do not send receipts with your return, but you must keep a receipt or invoice for every expense for six years and produce it if the CRA asks. An expense supported only by a bank statement can be denied in a review.

### Is there a limit on how much a self-employed person can deduct?

There is no overall cap, but each expense must be reasonable and for earning business income, and specific limits apply to meals, vehicles, home offices and capital purchases. A business loss from genuine expenses can generally be applied against other income in the same year.

### Can I deduct expenses from before my business started earning money?

Expenses incurred once the business has actually started, even before the first sale, are generally deductible. Costs of investigating whether to start a business at all are treated differently, so ask an accountant about anything spent before you began operating.

## Sources

- [Canada Revenue Agency — Guide T4002, Chapter 3: Expenses](https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4002/t4002-5.html)
- [Canada Revenue Agency — Business expenses](https://www.canada.ca/en/revenue-agency/services/tax/businesses/small-businesses-self-employed-income/business-expenses.html)
- [Canada Revenue Agency — Expenses section of form T2125](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/report-business-income-expenses/completing-form-t2125/expenses-section-form-t2125.html)