At a Glance

The CRA provides a detailed list of expenses that can be deducted by small businesses for tax purposes. While we may not possibly list each and every deductible expense, the tax agency defines an expense that can be claimed as “a reasonable current or future expense that must be paid to generate business income.”

Some expenses that businesses can claim include accounting and legal fees, bad debts, office supplies, office rent, property taxes, among others. Apart from business expenses, there are specific tax credits that can also be claimed including scientific research and experiment and investment tax credits.

How important are tax credits and deductions to your business?

Most tax deductions and credits are a little more complicated than this brief overview - but you now have a basic understanding of their impact on your business in terms of tax reduction, statements preparation and decision-making.

In the absence of tax credits and deductions, more business income is available for taxation thus raising your tax burden.

As earlier indicated, not all expenses are tax deductions. Any time you’re not sure whether or not an expense can be claimed, pose this question to yourself: "Is the expense an ordinary and necessary requirement in my line of work?"

If yes, it is deductible and if no, it isn’t.