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Business Advisory, Personal and Corporate Taxes, Business Start-Up, Bookkeeping

Income Tax Deductions for Self-Employed People


Tax season is bearing down on us once again, and now is a good time to start working on getting your paperwork and receipts in order to make tax time as low stress as possible (we aren’t going to aim for stress-free, because this is taxes we’re talking about). For self-employed people, this is the time to get on top of things, rather than waiting until the last minute.

The first step is knowing what you can claim as a deduction. Actually, this step should have been taken months ago, so you could have kept all the receipts that you will need to calculate your expenses and therefore your deductions, but we’ll assume that you have every business-related piece of paper that came into your house somewhere.

  • Home Office Expense: If you use part of your home/apartment for business use, you can claim a number of expenses associated with it (mortgage interest, home insurance, home repairs, utilities, etc.). There are conditions, however—you will only be able to claim a percentage of the expenses based on the percentage of your house that is used for business use and the amount of time you spend doing business-related things in that space. We recently went into detail on this very subject.
  • Rented Office/Business Space Expense: If you rent a space to conduct your business, all of these expenses can be used as deductions.
  • Business Use of Car Expense: If you use your personal vehicle to generate income, you can claim a percentage of the costs associated with your car. This will be based on mileage—mileage used for business versus mileage used for personal, so keeping a mileage log will be required.
  • Meals and Entertainment Expense: You can claim 50 percent of business-related meals and entertainment.
  • Capital Cost Allowance (CCA) Expense: If you would like to claim a Capital Cost Allowance on items like purchased computers, vehicles, or office furniture, this is probably something to discuss with your accountant. There are rules governing what can (or must) be claimed on a CCA, and also rules on how to claim the diminishing value each year, as well as rules about how to claim a profit if you sell an asset that you have claimed as a CCA.

There are many other expenses that can be used as deductions to counter income when calculating your taxes owing—cellphone, internet, conventions, annual dues and fees, legal and accounting fees, office expenses, etc. This list is not meant to be exhaustive; talking to your accounting professional is the best way to find out all the things you can and should be keeping track of and claiming as expense deductions.

Contact Shaw & Associates Chartered Accountants to help you out with your financial needs and tax planning and to give you the advice and services that will take you from where you are to where you want to be with your business. One complimentary meeting with us will put you and your business on a more profitable and positive path.