Self-employment Income – examples of deductions

Self- employment income is income earn from a business, profession, commission, farming or fishing according to the Canada Revenue Agency (CRA).

A self-employed has many advantages when comes to deductions compared to an employee. Individuals with self-employment income, are eligible to claim many expenses that occurred to generate the income.

Convention expenses

Individual can deduct the cost such as registration fees, travel expenses for attending a maximum of two conventions per year if the conventions is related to business and are held in a reasonable geographical area.

Interest expenses

Interest expenses incurred while borrowing money in order to carry on a business or in order to purchase property to be used in the business can be deducted.

Bad debts expense

If the amount of the income is uncollectible from the clients and was included in the current year or last year, individual can claim that expense if it is clear that it will not be paid.

Home office expenses

An individual with self- employment income has an office at home is eligible to claim the expenses such as rent, electricity, internet, telephone, insurance, repairs and maintenance.

Equipment purchased

Purchasing equipment for the office, the individual can claim a percentage of the cost each year depending on the type/ category of the equipment.

Motor vehicle expense

Certain expenses related to a motor vehicle used for business purposes can be deducted. However, if the vehicle used is classed as an automobile, a limit may apply to the amounts such as interest, leasing expenses and capital cost allowance.

Meal and entertainment deductions

Meal and entertainment deductions is available at 50 % of the total cost for federal and for Quebec individual is limited to the lesser of:

  1. 50% of the actual amount incurred;
  2. Sales percentage or fixed amount according a table (visit CRA website or contact us for more info)

Other deductions

Deductions such as legal and accounting fees, business registration fees, office supplies, hiring sub-contractor, traveling expense, advertising, and much more that a self-employed can be deducted.

Self-employment income and expenses are broad subject. Therefore, we recommend you see one of our consultants to make sure you get all your eligible deductions and get the expert done the work for you.

Income splitting between spouses What is NR-73 and NR-74?

Stay informed

Subscribe to receive advice and tips from our team!