You can help ease your financial burden by writing off business expenses. Here are a few guidelines from the CRA on deducting business expenses.
You can deduct many expenses you incurred to earn business income. There are limits on deducting capital expenses and GST/HST amounts. These come with specific allowances for these costs. The CCA (capital cost allowance) allows business owners to deduct the cost of depreciable assets over time. The input tax credit lets you recover GST/HST incurred over the course of commercial activities.
The CRA says you can deduct these expenses for your business:
Let's go over what some typical costs in these categories will include.
Expenses incurred for ads including those placed in Canadian media are deductible. You can also deduct finder's fees and business card expenses. Ads aimed at Canadian consumers but placed in foreign media outlets are not deductible. If you advertise in a magazine or other printed publication that's Canadian:
The CRA stresses the importance of determining exactly when business activity started. That way, you can make the correct deductions. Purchasing an existing business means reporting the date when the transfer of ownership took place. For start-ups, the starting date may be harder to pin down. Choose a date when you started specific activities to begin earning income from your business.
In this category, you can deduct:
The CRA recommends determining how much time and space is dedicated to your home-based workspace. You can then deduct the correct portion of expenses related to:
Deductible commercial insurance premiums include those incurred on:
Report your car insurance separately with other motor vehicle expenses.
You can deduct the interest on loans you've taken to buy property or to help your business. Limits apply to loans for vacant land or passenger vehicles.
You can deduct the costs of small everyday things such as:
Larger items like furniture or filing cabinets are capital expenses. GST/HST amounts incurred on deductible items are eligible for the input tax credit.