Deductions List for Canadian Corporations

Core Operating Expenses

These are fully deductible when incurred for the purpose of earning business income.

Expense	Notes
Advertising and marketing	Includes digital ads, print, sponsorships, content
Bank charges and fees	Account fees, wire transfer fees, NSF fees
Business insurance	Liability, property, errors & omissions, key person insurance
Office supplies	Paper, postage, minor equipment under your capitalization threshold
Professional fees	Legal, accounting, consulting, bookkeeping
Rent	Office, warehouse, retail space, month-to-month or lease payments
Software and subscriptions	Business tools, cloud services, industry databases
Telephone and internet	Business portion — prorate if also used personally
Travel (for business)	Flights, hotels, car rental, reasonable transportation costs
Utilities	Hydro, gas, water for business premises

Payroll and People

Expense	Notes
Salaries and wages	Including your own salary if you're on payroll
Employer CPP contributions	Your matching share of employees' CPP
Employer EI premiums	Your 1.4x matching share
Employee benefits	Group health plan, dental, life insurance
Vacation pay	Accrued and paid to employees
Recruiting and HR costs	Job postings, background checks

Vehicles have specific limits:

Expense	Rule
Operating costs (fuel, insurance, maintenance)	Deduct the business-use percentage only
Purchased vehicle — CCA	Maximum capital cost for Class 10.1 passenger vehicles: $37,000 (2024)
Leased vehicle — lease payments	Maximum deductible: $1,050/month (2024) before tax, business-use percentage
Parking	Fully deductible for business travel; not deductible for commuting

Keep a mileage log. The CRA regularly audits vehicle expenses and requires documentation of business use.

Meals and Entertainment

Expense	Rule
Business meals and entertainment	50% deductible only
Company events (e.g., staff holiday party)	100% deductible if open to all employees, otherwise 50%

Document who was present and the business purpose.

Home Office (for corporations)

If you genuinely use your home as your primary place of business, the corporation can pay you a reasonable rent for the workspace. This is deductible to the corporation and creates rental income for you personally (with offsetting home office expense deductions available on your personal return).

This is a more complex area — set it up with your Mesa CPA advisor rather than estimating on your own.

Interest and Financing

Expense	Rule
Interest on business loans	Fully deductible if the loan was used for business purposes
Interest on line of credit	Deduct the business-use portion
Mortgage interest on owned business property	Deductible
Bank fees on financing	Deductible

Capital Cost Allowance (CCA)

Not technically an expense — it's a tax deduction for the depreciation of business assets. Claimed on the tax return, not in your bookkeeping. Your Mesa CPA advisor determines the optimal CCA claim each year.

See: What Is CCA (Capital Cost Allowance)?

What Is NOT Deductible

Expense	Why
Personal expenses	Not incurred for business
Fines and penalties	CRA policy: you can't deduct consequences of breaking the law
Life insurance premiums (most cases)	Unless the policy is collateral for a business loan
Political donations	Not deductible for corporations
Clubs and gym memberships	Unless the primary benefit is to the business, not the employee

FAQ

Do I need a receipt for every deduction?

Yes — the CRA requires documentation for all deductions. For amounts under $30, minimal documentation is needed. For amounts over $30, you need the receipt with the supplier name, date, and amount. For amounts over $150, you also need the supplier's GST/HST number. Keep everything for 6 years.

What if I'm not sure whether something is deductible?

Record the expense and note the details (what it was, who it was with, the business purpose). Ask your Mesa CPA advisor at year-end. It's better to have the receipt and decide later than to lose it.

Can I deduct expenses that were paid in a prior year?

Expenses should be deducted in the year they were incurred, not when paid (under accrual accounting). If you missed a deduction in a prior year, it may be possible to amend the return — ask your Mesa CPA advisor.

What's the difference between a deduction and a tax credit?

A deduction reduces your taxable income (and therefore reduces tax by the amount × your tax rate). A tax credit directly reduces your tax bill dollar for dollar. Both are valuable — credits are generally more valuable per dollar than deductions at low tax rates.