Self-Employed? Here's How to Maximize Your Canadian Tax Deductions

The good news for those who are self-employed in Canada is that you can claim a wide range of deductions to lower your taxable income. However, you need to know what is allowed, how to track it, and where people often leave money on the table.

Here's how to maximize your Canadian tax deductions.

1. Know What You Can Deduct

You can deduct reasonable business expenses if you earn income through a business, freelance gig, or side hustle. These deductions refer to any costs directly tied to earning income. Common write-offs include:

Home office expenses (a portion of rent/mortgage, utilities, internet)
Vehicle costs (gas, maintenance, insurance, lease payments if used for work)
Office supplies and equipment
Business-related meals and entertainment (50% deductible)
Professional services (accountants, legal, consultants)
Software subscriptions
Phone bills
Advertising and marketing costs

Even small recurring charges (such as Canva, QuickBooks, or Zoom) can add up, so track everything.

2. Get Your Home Office Deduction Right

If you work from home, you can claim part of your home expenses based on the percentage of space used exclusively for work.¹ For example, if your office takes up 10% of your home's square footage, you can deduct 10% of eligible expenses, such as rent, utilities, and insurance.

To ensure that your claim is accurate and compliant, avoid these common mistakes:

Claiming non-eligible expenses (e.g., personal furniture or meals)
Miscalculating the percentage of space used for work
Neglecting to keep receipts and documentation

3. Track Vehicle Use Carefully

If you use your car for business, you can claim expenses based on your business-use percentage. However, to do this, you must keep a mileage log that includes the following:

Date of each trip
Purpose
Total kilometres driven
Business kilometres driven

Without this, the CRA can deny your entire claim. Apps such as MileIQ or Driversnote can automate this process.

4. Pay Into CPP, Then Deduct It

As a self-employed person, you pay the employer and employee portions of CPP contributions. While this may feel like a double hit, you can deduct the employer half on your return and claim a tax credit for the employee portion.² It's not a full refund, but it lessens some of the sting.

5. Keep Clean Records Year-Round

Your best tax deduction strategy? Stay organized. Keep digital copies of every receipt, track mileage, and separate business from personal spending. Use bookkeeping software, such as Wave, QuickBooks, or FreshBooks. The CRA can ask for records going back six years, so make sure you have them.

Self-employment taxes in Canada aren't exactly simple, but if you know what to claim (and what not to claim), you can keep more of what you earn. Take the time to track your expenses, learn the rules, and consider talking to a tax professional if you have any questions.

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This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

Ivy Pierson, CEP, MBA Investment Advisor Representative Securities and advisory services offered through Cetera Advisors LLC (doing insurance business in CA as CFGA Insurance Agency LLC), member FINRA/SIPC, a broker/dealer and a Registered Investment Adviser. Cetera is under separate ownership from any other named entity. Pierson Wealth Management is located at 28368 Constellation Rd., Ste. 396, Santa Clarita, CA 91355. CA Insurance Lic#0C92500. All investing involves risk, including the possible loss of principal. There is no assurance that any investment strategy will be successful