What Business Expenses Can I Claim as Self-Employed in Canada?
Self-employed people can generally deduct reasonable current expenses incurred to earn business income. The difficult part is often not the category name; it is proving the business purpose and separating personal use from business use.
Form T2125 is used by many sole proprietors and self-employed professionals to report business or professional income and expenses.
Common expense categories
- Advertising and marketing.
- Office supplies and certain business software or subscriptions.
- Professional fees.
- Business insurance.
- Telephone and internet costs based on business use.
- Vehicle costs based on eligible business use.
- Travel and meals where the tax rules allow them.
- Rent or workspace costs, including eligible business-use-of-home amounts.
- Interest and bank charges related to the business.
- Wages or subcontractor costs where properly documented.
Personal expenses are not business expenses
The CRA says personal expenses cannot be deducted. When an expense is partly personal and partly business, only the business portion should be claimed if the rules allow it.
Capital property is different
A computer, vehicle, equipment or furniture may be capital property rather than a current expense. Capital items can follow capital-cost-allowance rules instead of being deducted in full as an ordinary current expense.
GST/HST input tax credits affect the expense amount
If you are registered for GST/HST and claim an input tax credit for tax paid on an expense, the CRA says the business expense shown on Form T2125 is reduced by the input tax credit claimed.
Good bookkeeping is the real tax strategy
Waiting until tax season to guess what each transaction was makes the return slower and weaker. Categorize expenses during the year, keep receipts and document mixed-use items while the facts are still fresh.
FAQ
Can I claim every receipt from a business bank account?
No. The expense still needs a business purpose and must meet the tax rules.
Can I deduct the full cost of my car?
Usually not when the vehicle is also used personally. The eligible business portion must be calculated.
How long should I keep records?
Record-retention rules depend on the document and situation; follow the CRA’s current recordkeeping requirements.
Call to action
GROWS Financial can help self-employed clients clean up bookkeeping, separate personal and business costs and prepare the records needed for tax filing.
Related services: Accounting & Bookkeeping, Personal Tax.
Related reading: When Do I Need to Register for GST/HST in Canada?
Official sources for fact-checking
Last reviewed: October 21, 2026.