Written by Behdad Karimi Dermeni, CPA · Reviewed by Maryam Ajorloo, CPA
Nobody starts a business because they love tracking receipts. You started it to do the thing you are actually good at, and somewhere along the way a shoebox quietly filled up with crumpled paper and good intentions. The good news: a lot of what is in that shoebox can lower your tax bill. This guide walks through the tax write-offs for small business in Canada that owners most often qualify for, the one rule that decides whether something counts, and how to keep it all organized so nothing slips through the cracks.
The short version: A tax write-off is a business expense the Canada Revenue Agency (CRA) lets you subtract from your income before tax is calculated. If a cost was reasonable and you paid it to earn business income, it is very likely deductible. That single test covers the vast majority of everyday business spending, from your phone bill to your accountant's fee.
You do not need a spreadsheet to keep track of any of this. ReInvestWealth's AI Bookkeeper connects to your bank and sorts your expenses into the right categories automatically, so your write-offs are captured as you go instead of reconstructed in a panic every April.
The one rule behind every small business write-off
Here is the heuristic that makes the rest of this simple. If the expense was reasonable and helped you earn business income, you can likely write it off. Everything below is just that rule applied to specific situations.
Two words in that sentence do the heavy lifting. Reasonable means the amount fits the circumstances, so a modest laptop for a one-person consultancy is reasonable while a top-of-the-line home theatre is a harder sell. Business income means the cost has a genuine connection to the work you get paid for. When a purchase is part business and part personal, you claim only the business portion, not the whole thing.
This test applies whether you are self-employed and report on a T2125 (Statement of Business or Professional Activities) or incorporated and file a T2 corporate return. The form changes, but the logic of what counts as a write-off does not. It is also exactly how the Canada Revenue Agency describes business expenses: costs you incur to earn income, that are reasonable in the circumstances.
The write-offs most small businesses can claim
Most owners are leaving money on the table not because the rules are strict, but because they never wrote the expense down. Here are the categories that apply to almost every Canadian small business, especially service businesses.
Home office. If you run the business from home, you can claim the business-use portion of rent, utilities, home insurance, and internet. The portion is usually based on the floor area you use for work. If your office is 150 square feet in a 1,500 square foot home, that is 10% of eligible home costs.
Vehicle expenses. Fuel, insurance, maintenance, lease payments, and parking are deductible based on how much you drive for business. Keep a logbook: if you drove 20,000 km in the year and 12,000 of them were for business, you can claim 60% of your vehicle costs.
Phone, internet, and software. Your business phone plan, internet, and the subscriptions you actually use to run the business (design tools, scheduling apps, cloud storage) are deductible. Split out any personal use.
Advertising and marketing. Online ads, your website, business cards, and promotional materials are fully deductible when they promote your business.
Professional fees. Accounting fees, bookkeeping, and legal advice for the business are deductible. Yes, the cost of preparing your business taxes counts.
Office supplies and small equipment. Pens, paper, postage, and low-cost tools are deductible in the year you buy them.
Meals and entertainment. These are 50% deductible, not 100%. Take a client to a $200 dinner and you can write off $100. The CRA draws this line on purpose, so plan around it rather than being surprised by it.
Business travel. Flights, hotels, and ground transport for business trips are deductible. (Meals on the road still follow the 50% rule.)
Salaries and subcontractors. Wages you pay employees and fees you pay to subcontractors are deductible business costs.
Bank fees and interest. The interest on a business loan or line of credit, plus your business bank fees, are deductible. This is one of the most commonly missed write-offs because the amounts look small until you add up a full year.
This is exactly the sorting ReInvestWealth's AI Bookkeeper does for you, so each transaction lands in the right category the moment it hits your account. See how it works.
Big purchases: current expense or capital cost?
Here is the nuance that trips people up. A small item you use up within the year (office supplies, a subscription) is a current expense and comes off your income right away. A larger asset that lasts for years (a laptop, a vehicle, equipment) is a capital cost, and you deduct it gradually over several years through capital cost allowance (CCA).
You still get the full write-off eventually. It just happens over time rather than all at once. Sorting purchases into the right bucket keeps your books accurate and your filing clean, which matters a lot more than it sounds when you are looking back at a busy year.
What you cannot write off (and the mistakes that cost the most)
A few things are simply not deductible, and a few good expenses get lost to sloppy records.
Personal expenses. Your everyday clothing, your lunch when you are not with a client, your personal Netflix: none of it counts, even if you sometimes work in the same room.
The personal portion of a mixed cost. If your phone is 70% business, you claim 70%, not the whole bill.
Anything you cannot back up. This is the big one. One thing we hear often from customers is that a credit card statement alone is not enough proof for the CRA. You need the actual receipt showing what was bought, when, and from whom. The CRA asks you to keep your records for **six years** from the end of the tax year they relate to.
None of these are hard to avoid. They just require capturing the expense properly the first time, which is a habit problem more than a tax problem.
Write-offs by profession: find your exact guide
The categories above apply to nearly everyone, but some professions have their own high-value write-offs worth a closer look. If one of these is you, start with the guide built for your situation:
Real estate agents: commission splits, vehicle use, and marketing add up fast. See our guide to tax write-offs for real estate agents in Canada.
Consultants: home office, professional development, and client travel are your big ones. See tax write-offs for consultants in Canada.
Freelancers and the self-employed: read tax write-offs for freelancers in Canada, and if you report on a T2125, our T2125 tax form guide walks through the form line by line.
How to capture every write-off (without the shoebox)
The write-offs are only worth something if you can prove them. Here is the setup that makes that automatic.
Open a dedicated business account. Run every business expense through one bank account and card. This alone separates business from personal and makes your write-offs obvious instead of tangled up with grocery runs.
Digitize receipts as you get them. Snap or forward each receipt into a single place the moment you have it. ReInvestWealth's Smart Shoebox (your receipt inbox) reads the details and matches each receipt to the right transaction, so you are never digging for proof later.
Let the books stay current on their own. Connect your bank and let the AI Bookkeeper categorize transactions as they land. Your write-offs are captured in real time, and at tax time your accountant gets clean, audit-ready books instead of a mystery.
Over 3,000 entrepreneurs already run their bookkeeping this way. What that means for you: the write-offs get captured without you thinking about them, and tax season stops being the thing you dread in March.
There is one more Canada-specific advantage worth knowing. ReInvestWealth is certified by the CRA for GST/HST Internet File Transfer, so you can e-file your GST/HST return directly to the CRA, and the sales tax you pay on those deductible expenses gets tracked and filed in the same place your books live.
Frequently asked questions
What can I write off as a small business in Canada?
Any reasonable expense you paid to earn business income. Common ones include home office costs, vehicle expenses, phone and internet, software subscriptions, advertising, professional fees, office supplies, business travel, salaries, subcontractors, and bank fees and interest.
How much of a business expense can I write off?
Most business expenses are fully deductible. The main exceptions are meals and entertainment (50% deductible) and any cost that is part personal, where you claim only the business-use portion. Large assets like a laptop or vehicle are written off gradually through capital cost allowance.
Can I write off my car as a small business owner?
Yes, but only the business-use portion. Track your business kilometres against your total kilometres with a logbook, and apply that percentage to your fuel, insurance, maintenance, and lease costs.
Do I need receipts to claim a write-off?
Yes. A credit card or bank statement is not enough on its own. The CRA wants the actual receipt showing what you bought, when, and from whom, and you should keep it for six years from the end of the tax year.
Are tax write-offs and tax deductions the same thing?
In everyday use, yes. "Write-off" is just the common word for a deductible business expense. Both reduce the income you pay tax on. (A tax credit is different: it reduces the tax itself rather than your income.)
A quick recap
Write-offs are not a loophole. They are the tax system working as intended: you pay tax on your profit, not your revenue, and every reasonable business expense lowers that profit. Capture the expense, keep the receipt, and let the categories take care of themselves.
Connect your bank, forward your receipts, and let the AI keep your books CPA-level clean. ReInvestWealth is built by CPAs and rated 4.8 on Capterra. Start free for 30 days. Get started.
A note from our CPAs: This guide is educational and covers the general rules for Canadian small business owners. Tax situations vary, so for advice on your specific circumstances, talk to your accountant. (If they use ReInvestWealth, they will already have clean books to work from.)
Written by Behdad Karimi Dermeni, CPA
> Co-founder of ReInvestWealth and a founding community builder at Stripe. Behdad built ReInvestWealth to give smart, busy entrepreneurs CPA-level accounting without the CPA-level price tag. Read more · Connect on LinkedIn
Reviewed by Maryam Ajorloo, CPA
> Maryam Ajorloo is the co-founder of ReInvestWealth and a CPA who specializes in small business tax, sales tax, and everyday bookkeeping. She helps entrepreneurs keep clean, audit-ready books and make sense of write-offs, filing deadlines, and the numbers behind their business. Read more · Connect on LinkedIn
