CRA business expenses are the reasonable current costs a business incurs to earn business income — office costs, advertising, professional fees, rent, travel, vehicle use and more — deducted on Form T2125 if you’re self-employed (an incorporated business uses the T2 corporation income tax process instead). Personal costs and most capital purchases don’t qualify as a current expense. Many of the same purchases also carry GST/HST that a registered business can recover as an input tax credit (ITC), subject to separate rules.
CRA business expenses list
The table below is a starting business expenses list: common categories, the T2125 line CRA uses for the income-tax deduction, and whether the GST/HST paid on that purchase is generally recoverable as an ITC. See CRA’s types of purchases and expenses for the full ITC list this table summarizes. Insurance and most financial services are exempt from GST/HST, so there’s usually no tax to recover on them — see CRA’s business expenses and exempt goods and services.
| Expense | T2125 line | Income-tax treatment | GST/HST ITC? |
|---|---|---|---|
| Advertising | 8521 | Generally deductible; some periodical advertising is only 50% deductible, and advertising with a foreign broadcaster directed mainly at Canada is not deductible | ITC on GST/HST paid or payable, subject to commercial use and other CRA conditions |
| Meals and entertainment | 8523 | Generally 50% of the lesser of actual cost or a reasonable amount; exceptions apply | ITC generally limited to 50% for most businesses; different rules apply to some |
| Insurance | 8690 | Deductible if business-related | No ITC — insurance is an exempt supply |
| Office expenses | 8810 | Fully deductible | ITC on GST/HST paid or payable |
| Professional fees | 8860 | Generally deductible; fees to buy capital property are added to its cost instead | ITC on GST/HST paid or payable |
| Rent | 8910 | Fully deductible | ITC on commercial rent |
| Travel expenses | 9200 | Business-use share deductible | ITC on the taxable, business-use portion |
| Telephone and utilities | 9220 | Business-use share deductible | ITC by business-use percentage |
| Motor vehicle expenses | 9281 | Business-kilometre share of operating costs; business parking fees in full | ITC by business-use percentage; a capital vehicle purchase follows separate rules |
| Business-use-of-home expenses | 9945 | Area/time share deductible; cannot create or increase a loss | Check GST/HST eligibility separately |
Expenses with special limits
Several categories on the list above follow their own rules rather than a straight deduction. Meals and entertainment are generally deductible at 50% of the lesser of the actual cost or a reasonable amount (exceptions apply), and for most businesses the ITC is generally restricted to 50%. If you regularly use a vehicle for business and personal trips, its operating expenses are generally deductible by the business-use share of total kilometres driven — keep a log of both. Parking fees related to your business activities can be deducted in full. CRA: motor vehicle expenses. Business-use-of-home expenses require the space to be your principal place of business, or used only to earn business income and regularly to meet clients; the deduction cannot create or increase a business loss. CRA: business use of home. Computers, equipment, vehicles and other depreciable property generally can’t be deducted in full in the year you acquire them; instead, you can deduct their cost over several years through capital cost allowance (CCA). Start-up costs incurred once the business has begun can be deducted under the usual expense rules. For a full category-by-category walkthrough and where each line lands on the form, see our T2125 guide, and for how these expenses fit into your overall return, see self-employed taxes in Canada.
What CRA does not let you deduct
Personal expenses, most fines and penalties imposed under the law of Canada, a province or a foreign country, most recreational club dues, and most life-insurance premiums are not deductible business expenses. As a rule, CRA lets you deduct any reasonable current expense you incur to earn income.
Can I write off subscriptions for my business?
A subscription used to earn business income falls under CRA’s general rule that you can deduct any reasonable current expense you incur to earn income. An ITC is available only for GST/HST paid or payable on it, subject to the other ITC conditions — see our input tax credit rules guide.
What is the maximum tax write-off for business expenses?
CRA’s general rule is that you can deduct any reasonable current expense you incur to earn income; some categories carry their own limits instead of a single cap, such as the 50% meals restriction and the home-office no-loss rule above. For how these deductions interact with your total tax bill, see self-employed taxes in Canada.
A mixed-use example
Suppose an eligible registered sole proprietor has a $100 ordinary operating expense plus $13 HST, and a fair allocation shows 70% commercial use. Assume no special restriction applies and the necessary records are held. The ITC is $13 × 70% = $9.10, not the full $13 and not 70% of the $113 invoice as an ITC. Save the invoice and the calculation supporting the 70% allocation. This example uses the ordinary operating-expense rule; it does not calculate an ITC for a vehicle purchase or meal. CRA: operating-expense eligibility
ITC versus income-tax deduction
For income tax, a reasonable current expense incurred to earn business income may be deductible, subject to its own rules. On Form T2125, include only the business portion and reduce the applicable expense by any ITC claimed. Capital purchases are handled separately and may be subject to capital cost allowance rules. CRA: T2125 expenses
In the example above, if the $113 expense is an otherwise deductible current expense, its 70% business share is $79.10. After the $9.10 ITC, the amount for the applicable T2125 expense line is $70.00. Eligibility for the ITC and the deduction must each be established; this does not turn the $9.10 credit into a second expense deduction.
For a vehicle used for work and personal travel, retain total and business kilometres as well as receipts; income-tax vehicle costs generally use the business proportion, and different GST/HST rules can apply to buying a capital vehicle. For income-tax home-office deductions, the workspace must be your principal place of business or be used only to earn business income and regularly to meet clients, customers or patients. A reasonable allocation can use the workspace area and, for a shared room, time; the deduction cannot create or increase a business loss. GST/HST home-office eligibility must also be checked separately. CRA: motor vehicle expenses; CRA: business use of home; CRA: ITC commercial-use rules
ITC eligibility itself runs on separate rules — registration status, GST/HST paid or payable, a fair commercial-use percentage, supporting documents, and a claim deadline that, for most registrants, is the due date of the return for the last reporting period ending within four years after the end of the reporting period in which the ITC could first have been claimed. See our input tax credit rules guide for the full requirements; CRA: ITC eligibility and time limits, eligibility percentages. Check filing guidance for how to include eligible ITCs when you file.
Sources checked October 16, 2026: CRA’s ITC overview and records, eligibility percentages, and T2125 expenses.