What Can I Deduct as a Business Expense?
This is a question that we get asked often. The answer is if this expense was paid in an effort to earn business income then yes, it is deductible. If it was not used to earn business income, then the answer is no.
The answer that the Canada Revenue Agency (CRA) has provided is quite simple: a deductible business expense is any reasonable current expense (cost) you paid or will have to pay to earn business income (revenue). Though reasonable is determined by CRA and not you.
Personal Expenses which are commonly audited.
Travel Expenses – only trips for business purposes such as a meeting or conference are deductible, and this only includes airfare and accommodations for the duration of the meeting.
Shareholder/Employee Medical Expenses – unless you have set up a formal health insurance plan in your company, health expenses paid for shareholders and employees are not deductible.
Non-business meals – Unless a meal is to try and earn business income, such as taking a client out for lunch or dinner it is not deductible. Taking yourself out for lunch is not deductible!
Expenses Deductible for Business Purposes
Here is a list of the types of expenses that are deductible for business purposes, they are all linked to the CRA information site for further information.
This is a long list and properly accounting for your business expenses can be difficult, but it is our job at Number Crunchers® to figure this out for you.
Filed Your Tax Return? – What to do if you Forgot Something
Differences Between a Tax Credit and a Tax Deduction in Canada?
Who is Required by the CRA to File a Tax Return in Canada?
Do I Have to Report Foreign Income on my Canadian Tax Return?
What Your Tax Accountant Needs to Prepare Your Income Tax Return
Will Covid-19 Relief Measures Affect my Taxes?
Is it Time for the Annual Clean-up and Back-up of your Files?
When are Canadian Business Taxes Due?