Operating Expenses

You may deduct any reasonable expenses incurred by the corporation to earn business or property income, except the following expenses: 

• investments;
• capital expenditures or capital losses;
• reserves (also called "contingent accounts" or "sinking funds"), unless their deduction is expressly permitted under the Taxation Act;
• expenses incurred to establish a business, before operations actually begin.

Certain expenses paid by the corporation may constitute taxable benefits for the corporation's employees or shareholders. These include

• allowances for the use of a motor vehicle
• contributions to insurance plans
• amounts paid for board, lodging, transportation and meals

The type of remuneration paid to the corporate manager must be a salary. The corporation may also pay a salary (for services actually rendered), fees or dividends to a shareholder. As a rule, such sums (excluding dividends) form an integral part of the shareholder's income, and may be deducted from the income of the corporation.

For more information, refer to the document Taxable Benefits (IN-253-V).