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A Simple Guide to Tax Deductions for Home-Based Businesses

COVID-19 has caused many individuals in Canada to start a home-based business or “side gig” to accompany their primary source of income. Our team from Budget Accounting performs professional Accounting in Richmond Hill services, and we are here today to share with you the potential tax deductions that one may be applicable for when speaking of home-based enterprises.  

In this guideline, we will list and explain different tax deductions that can assist in lowering the amount taxable. 

Business Start-up Costs 

Expenses incurred like furniture, equipment, inventory, supplies, insurance, and business registration fees can all be referred to as start-up costs and may be applicable for tax deductions. 

Business Fees, Taxes, & License 

You can deduct all annual license fees and some business taxes you incur to run your business. 

Some examples of license fees are: 

  • beverage licenses 
  • business charges 
  • trade licenses 
  • motor vehicle licenses 
  • motor vehicle registration permits 

Some examples of business taxes that may be deductible are: 

  • municipal taxes 
  • land transfer taxes 
  • gross receipt tax 
  • health and education tax 
  • hospital tax 

You can also deduct annual dues or fees to keep your membership in a trade or commercial association, as well as subscriptions to publications. You cannot deduct club membership dues (including initiation fees) if the main purpose of the club is dining, recreation, or sporting activities. 

Salaries & Wages 

Employment Insurance Premiums (EIP) and Canada Pension Plan (CPP) that are paid to employees in Canada can be deducted for home-based businesses. 

Office Supplies 

Another popular business expense is office supplies. Whether you are using paper, pens, sticky notes, folders, etc., these items are fully known to be tax deductible. 

Insurance Expenses 

Ordinary business insurance for buildings, equipment, or machinery that is utilized for the company can be deductible. 

Business Vehicle Expenses  

Create a logbook summing all the miles you have driven in the year for business-related purposes and use this to claim deductions for business travel. This includes meeting clients, visiting customers, etc. 

Home Expenses  

If your home is your primary location for meeting with clients, a percentage of the space will qualify for deductibles. Home expenses can include utilities, rent, property tax, maintenance, condo fees, insurance, energy, etc. 

For example, if 20% of a home is used for business purposes, the CRA will allow you to deduct 20% of  these expenses. 

Travel Expenses 

All business-related travel can be deducted. This includes: entertainment, beverages, meals, and accommodations, however only 50% of the meals and entertainments are tax-deductible  

Bad Debt 

The CRA will allow companies to write off bad debt that is owed to your company but cannot be collected. This is not related to mortgages or conditional sales agreements. 


Advertising and marketing expenses can be tax deductible. This includes all promotional material, digital content, television, radio, or print ads in magazines or newspapers. 

Professional Fees 

Accounting or legal services can be classified as deductions for home-based or small businesses in Canada. Keep this in mind for any professional help that you hire. 

How Budget Accounting Can Help 

If you would like assistance when it comes to your Personal Tax Filing in Richmond Hill, our team at Budget Accounting would be happy to provide you with our services. Give our team a call today at (905) 508-5007 to book a consultation. 

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