If you are a self-employed person or a member of a partnership, you can deduct certain expenses from your business income.
As a rule, you can deduct any reasonable expense incurred to earn business income. However, certain expenses are not deductible. These include
- capital expenditures or capital losses;
- reserves (also called "contingent accounts" or "sinking funds"), unless their deduction is expressly permitted under the Taxation Act; and
- expenses incurred to establish a business, before operations actually begin.
Refer to the guide Business and Professional Income (IN-155-V) for more information about the deductions to which you may be entitled. You will find information about:
- the cost of goods sold;
- business taxes and licences;
- premium paid for professional liability insurance required to maintain professional status;
- the cost of labour and equipment required for the maintenance and repair of property used to earn business income;
- salary or wages paid to a child or a spouse;
- meal and entertainment expenses;
- motor-vehicle expenses (travel expenses, interest on a loan for the purchase of a motor vehicle, capital cost allowance, leasing expenses, etc.);
- the principal classes of property and their respective depreciation rates; and
- expenses related to the business use of your home.
As a member of a partnership, you can deduct from your share of the partnership's income (or loss) the expenses you incurred with respect to that income (or loss), provided the expenses:
- are not included in the partnership's expenses;
- are deductible only by you; and
- are not reimbursed to you.