This is a question we get frequently from entrepreneurs and business owners. As the CRA says “if it is an expense you incur in the course of doing business (marketing, networking, selling, operating etc.) then it’s a business expense”. There are some exceptions such as yoga pants for a yoga teacher, golf memberships or a wine spritzer at lunch.
The best practice for good business is that for every expense you want to claim have the back up information, receipts and invoices. You do this by keeping all your business-related vouchers and receipts and recording all your expenses in a journal.
Examples of expenses you can deduct include:
- accounting and legal fees
- advertising expenses
- licenses and dues
- interest and bank charges
- meals and entertainment
- maintenance and repairs
- rent and utilities
- vehicle expenses
- use of a workplace in your home
- inventory and costs of goods sold
Typically a percentage of an expense is claimable.
Click here for a full list of expenses and how to calculate use of home expenses
Also important, is for you to keep detailed records of your business activities. They help you to identify your different sources of income and help you decide if you should charge GST/HST. You may receive cash or property from many different sources. If you do not have records showing your income sources, you may not be able to prove that some sources are non-business or non-taxable for income tax purposes. You also need to have complete and organized records to show that your supplies are zero-rated or not subject to GST/HST.
Good records also keeps you up to date about the financial position of your business. Here is list of the records you will need to keep for your business.