Top 5 Tax Deductions for Canadian Small Businesses
One of the easiest ways to improve your corporation's bottom line is to ensure you are claiming all eligible business expenses. The CRA allows you to deduct "reasonable expenses incurred to earn income." Here are the top 5 we see missed most often.
1. Home Office Expenses
If you use a workspace in your home exclusively for earning business income, or if you use it regularly to meet clients, you can deduct a portion of your home maintenance costs (heat, electricity, insurance, property taxes, and mortgage interest) based on the square footage used.
2. Vehicle Expenses
If you use your personal vehicle for business, keep a detailed logbook of your mileage. You can deduct a portion of gas, insurance, registration, and repairs.
- Tip: Use an app to track mileage automatically; the CRA is strict about logbooks in an audit.
3. Professional Fees
Accounting, legal, and consulting fees are fully deductible. Ideally, this includes your subscription to Optax!
4. Advertising & Marketing
Website hosting, domain names, social media ads, and even business cards are deductible. Note that meals and entertainment for prospecting clients are generally only 50% deductible.
5. CCA (Capital Cost Allowance)
Large purchases like laptops, office furniture, or machinery cannot be expensed all at once. Instead, you claim depreciation (CCA) over several years.
- Optax AI automatically categorizes these assets and calculates the optimal CCA claim for your T2 return.
Disclaimer
Tax laws can change. While Optax helps automate compliance, always review your specific situation or consult a professional for complex scenarios.