Decision centre
Small Business Expense Deductions Canada
Separate current expenses from capital property, allocate mixed personal costs and carry the results into a complete self-employed tax plan.
Vehicle expenses
Prorate actual operating costs from a business-kilometre log.
Open this tool → CCACapital cost allowance
Estimate maximum CCA and closing UCC for common asset classes.
Open this tool → WorkspaceBusiness-use-of-home expenses
Allocate home costs using workspace area and time.
Open this tool → Year-endSelf-employment tax
Connect net business income with tax, CPP and instalments.
Open this tool → Sales taxGST/HST registration
Test the small-supplier threshold and registration date.
Open this tool → Cash flowTax buffer
Turn revenue into a monthly tax, CPP and GST/HST reserve.
Open this tool →How to use this group
Start with the expense category. Current operating expenses are generally deducted in the year incurred; capital assets enter a CCA class; mixed-use expenses need a reasonable business allocation.
Keep invoices, receipts, kilometre logs and allocation records. Then use the self-employment calculator to see how the resulting net income affects income tax, CPP and instalments.
Frequently asked questions
What business expenses can a sole proprietor deduct?
A business can generally deduct reasonable current expenses incurred to earn income. Capital property is usually deducted over time through CCA, and personal portions must be excluded.
Where do self-employed expenses go on the tax return?
Most sole proprietors and partnerships report business or professional income and expenses on Form T2125, which flows to the T1 return.
Can a business expense create or increase a loss?
Many current expenses can, but specific restrictions apply. For example, business-use-of-home expenses generally cannot create or increase a business loss, and rental CCA cannot create or increase a rental loss.