Small Business Tax Deductions in Canada Explained
As a small business owner in Canada, maximizing your tax deductions can significantly reduce your tax bill. Understanding what expenses qualify is key to lowering your taxable income. Let’s explore the most common tax deductions.
1. Home Office Expenses
If you work from home, you can deduct a portion of:
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Rent
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Utilities
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Property taxes
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Internet
2. Vehicle Expenses
Deduct mileage, fuel, insurance, lease payments, and maintenance for business-use vehicles. Keep a detailed logbook to support your claims.
3. Office Supplies & Equipment
You can write off:
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Computers
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Software
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Furniture
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Stationery
4. Business Meals & Entertainment
You can deduct 50% of meals and entertainment related to business meetings.
5. Travel Expenses
Business travel costs such as flights, hotels, and transportation are deductible.
6. Salaries & Wages
Salaries paid to employees (including family members) are deductible, as long as they're reasonable and documented.
7. Advertising & Marketing
Costs for online ads, social media, printing materials, and promotional events are eligible deductions.
8. Professional Fees
Accountant, lawyer, or consultant fees are fully deductible.
9. Depreciation (CCA)
You can claim Capital Cost Allowance (CCA) for assets like equipment, vehicles, and buildings over time.
10. Bad Debts
If you sell on credit and can’t collect, bad debts can be written off as a deduction.
Conclusion
Tax deductions are powerful tools for small businesses in Canada. Keep detailed records and consult a tax professional to ensure you're claiming everything you’re entitled to while staying compliant with CRA regulations.
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