Business Expenses You're Probably Missing (Canadian Corporation)

Small expenses are easy to leave out of the books when you pay personally: a software renewal, a client trip, a professional membership. Recovering those records can change the corporation's taxable income. The amount spent and the amount deductible are not always the same, though. Separate business from personal use, current costs from capital purchases, and the company's expenses from an owner's benefits.

The figures below are illustrations, not a claim about what a typical business spends. Keep the invoice, business purpose and reimbursement record for each item. CRA business-expense guidance

Phone and internet

A business portion of a shared phone or internet bill may belong in the company's expenses. Use a supportable allocation, not a standard percentage copied from an example. If you paid the bill personally, document the amount the corporation reimburses and check whether any personal portion creates an employee or shareholder benefit.

Save invoices and the basis for the split. A separate business service is easier to support than an unexplained share of a household account.

Professional development

Keep the course invoice and a note explaining its connection to the corporation's work. Relevant staff training, technical publications and professional renewals may be business costs, but a personal-interest course does not become a business deduction just because the company pays.

For employer-funded education, CRA distinguishes training mainly benefiting the employer from training mainly benefiting the employee. A course leading to a degree or certificate is not automatically a taxable employee benefit when it relates to current or future responsibilities. That is a different question from a self-employed person's capital-versus-current training expense. CRA employer-provided education rules

Review conferences, mixed holiday trips, new qualifications and owner-only benefits individually. The worked example below assumes a $500 business course that qualifies as a current expense; it does not assume every training purchase does.

Professional memberships and insurance

Business association dues, professional memberships and ordinary business insurance can be easy to miss when they renew annually. Save the policy or membership description as well as the payment record. An invoice labelled "membership" could be a professional due, workspace rent or a recreational-club fee, with different treatment.

Do not include personal coverage or assume a golf or dining club becomes deductible because clients attend. A company payment benefiting the owner personally also needs a benefit assessment. The example assumes $400 of eligible business dues and $1,500 of ordinary business insurance, with no personal coverage or prepayment for a later year. CRA expenses, dues and insurance

Business driving in your personal car

For an owner-employee using their own vehicle, the corporation may pay a reasonable allowance based on employment-related kilometres or reimburse documented business costs. It cannot combine those methods to pay the same costs twice. A sole proprietor instead claims eligible actual vehicle costs; there is no tax-free mileage allowance paid to themselves.

At the provincial rate, 3,000 business kilometres produce a $2,190 allowance. Keep a log of dates, destinations, purposes and distances. Non-taxable treatment depends on meeting the allowance conditions, not just using a number from the table. The 72-cent and 66-cent provincial rates apply to 2025. CRA allowance rates and conditions

If the company owns or leases the car, use the company-car expense and benefit rules instead. Our vehicle expense guide separates the ownership arrangements and records.

Bank charges, interest and software

Capture account fees, payment-processing costs and the business portion of card fees. For borrowing, keep the agreement and evidence of what the borrowed money financed: loan principal is not an interest expense, and borrowing costs can have timing rules. An interest charge on a personal purchase is not made deductible by paying it from a business account.

Recurring software, hosting and storage subscriptions used in the business can be current costs. An acquired software asset, a lasting licence or substantial development project may need capital treatment. Keep that distinction when categorizing invoices, and allocate personal use. CRA current-versus-capital guidance

Meals and entertainment

The ordinary limit is 50% of the lower of the actual business cost and a reasonable amount. Exceptions exist, so identify the event and attendees rather than applying one rule to every food purchase. For a qualifying client meal, retain the receipt and record who attended and why. CRA meal and entertainment rules

If eligible client meal expense, after recoverable GST/HST, totals $1,560 for the year and the normal limit applies, the income-tax deduction is $780. Record the expense in the books and make the tax adjustment; do not call the entire $1,560 a deduction in a savings estimate. For GST/HST registrants, meal ITCs generally face their own corresponding 50% restriction. CRA GST/HST meal rules

Legal and professional fees

Routine bookkeeping, payroll services and advice on operating contracts can be current business costs. Fees to acquire capital property generally form part of its cost instead. Patent, trademark, incorporation, financing and asset-purchase work can have specific treatment; review the invoice detail rather than deducting all professional fees immediately. CRA legal and accounting fee guidance

Worked example: spending versus deduction

Assume the company paid or properly reimbursed these reasonable 2026 costs, business-purpose and benefit requirements are met, and each item except meals qualifies as a current deduction. Amounts exclude recoverable GST/HST. The mileage allowance uses the provincial rate for the employee's personal vehicle.

If all $9,630 reduces income otherwise taxed at the combined BC small-business rate of 11%, the tax reduction is $1,059.30. At the general combined 27% rate it is $2,600.10. Those examples assume the applicable federal and provincial rate conditions are met and sufficient taxable income exists. A deduction reduces taxable income; it does not refund the purchase price. CRA corporate rates, BC corporate rates

Keep the evidence with the expense

Use Ledg to organize expense entries and their supporting records. Review categories before confirming entries, and retain the business-use calculation or reimbursement report where an invoice alone cannot establish the treatment. Your year-end handoff should let the accountant see both what was paid and why it belongs to the business.