If you're self-employed, you can deduct reasonable expenses you paid to earn business income, such as supplies, software, advertising, phone and internet, professional fees, and the business share of your vehicle and home. Business meals and entertainment are generally limited to 50%. Personal costs aren't deductible, and you should keep receipts for six years.
The basic rule
You can deduct an expense if it's reasonable and you paid it to earn business income. When something is used for both business and personal life, such as a phone or a car, you claim only the business share. Self-employed income and expenses are reported on form T2125 with your personal tax return.
Common expenses you can claim
- Advertising, including your website and business cards.
- Office supplies and software subscriptions.
- The business share of your phone and internet.
- Accounting and legal fees.
- Business insurance, licences and professional memberships.
- Bank fees on your business account.
- Rent for business premises.
- Payments to subcontractors.
- Business meals and entertainment, generally limited to 50% of the cost.
Larger purchases that last more than a year, such as computers, furniture and tools, are generally claimed over several years as capital cost allowance, not all at once.
Working from home
You can claim part of your home costs if your workspace is your main place of business, or you use it only for business and regularly meet clients there. Claim the share that matches the space you use: heat, electricity, home insurance, maintenance and rent. Homeowners can include the business share of mortgage interest and property tax, but not mortgage principal. Home office expenses can't create or increase a business loss; any unused amount carries forward to next year.
Using your vehicle
Keep a logbook of business trips and kilometres. You then claim the business percentage of fuel, insurance, repairs, licence and registration, plus lease payments or capital cost allowance and loan interest, which have limits for passenger vehicles. Driving between home and a regular workplace usually counts as personal.
What you can't claim
- Personal and living expenses.
- Everyday clothing, even if you wear it to work.
- Most fines and penalties, including CRA interest and penalties.
- Money you pay yourself as a sole proprietor. That's a withdrawal, not an expense.
Keep your records
Keep receipts and records for six years from the end of the tax year they relate to. If you're registered for GST, claim the GST you paid as input tax credits and deduct the rest of the cost as the expense.
Questions about this guide
Can I claim my phone bill if I'm self-employed?
Yes, the business-use share of it. Keep a reasonable record of how much you use the phone for work.
Can I claim meals?
Meals and entertainment with a business purpose, such as meeting a client, are generally deductible at 50%. Your own everyday meals aren't.
This guide is general information for the 2026 tax year, not advice for your situation. For help with your own taxes, book a time with TaxCorner.