Business expenses: Deductible or not?

November 26, 2024

As an entrepreneur, you know that you can deduct some of your expenses from your business income. The trick is knowing which ones and when!

Read on to find out if you’re casting your net too wide—or not wide enough.

If you have a home office, calculate the percentage of space that it takes up in your home. This is the percentage of housing-related expenses that you can deduct for things like:

• Rent payments or mortgage interest
• Insurance
• Property taxes

You can also deduct other expenses, including:

• Telecommunications (internet, phone, etc.)
• Office supplies
• Advertising
• Computer equipment

In Quebec, some of these expenses are only deductible up to 50%.

Depending on the number of kilometres driven for business purposes, a percentage of these expenses can be deducted as well:

• Finance or lease payments
• Gas
• Maintenance and repairs
• Registration, insurance and driver’s licence

This category is more complicated. Here are a few examples of when you can deduct 50%.

• Meals with clients
• Outings with clients to develop your business relationship (for instance, taking a client skiing or to a hockey game)

But golf and fishing aren’t on the list of eligible expenses. Tricky, isn’t it? If you’re not sure, check the Canada Revenue Agency (CRA) website.

If you own a business, you probably need to purchase vehicles, furniture, computer equipment and real estate.

These business expenses, which are called “capital property,” can be deducted over a period of several years. The number of years is calculated based on a percentage of the purchase price and the life expectancy of the property.