13 self-employed expenses to classify correctly
An expense must serve earning income
The starting point is not the category chosen in a software, but the link between the expense and the activity. A $2,000 Facebook advertising invoice entirely devoted to finding clients can generally be classified as a business expense. The same subscription or purchase used partly for personal life requires a reasonable, documented allocation. A deductible expense reduces net income; it is not reimbursed dollar for dollar by the government.
The 13 categories to watch
| Category | Example | Starting treatment |
|---|---|---|
| Advertising | $2,000 digital campaign | Business portion |
| Meals | $60 client dinner | Often 50%, i.e. $30 |
| Home office | 13.33% of $14,400 | $1,920 if criteria met |
| Vehicle | 66.6% of $3,000 | ≈ $2,000 per mileage |
| Commercial rent | Separate premises | Business portion |
| Insurance | Professional liability | Business portion |
| Banking and interest | Business account | Eligible fees |
| Professional fees | Accountant or lawyer | Related to the activity |
| Supplies and telecom | Software, paper, phone | Business portion |
| Training | Work-related convention | Per nature and rules |
| Travel | Flights and hotels | Documented business trip |
| Subcontractors | Specialized contract | Contract and proof |
| Taxes, permits and CCA | Permit or depreciable asset | Separate treatments |
Home office deserves a separate calculation. Add up the eligible costs, then apply the business-use proportion. An area-based method can give 13.33% if the workspace represents that share of the dwelling. Usage time can also count when the room is not exclusive. Eligibility criteria and limits must be checked; automatically turning a quarter of your rent into an expense because you sometimes work from home would be too generous.
The vehicle rests on a logbook, not an impression
If 10,000 of 15,000 kilometres are driven for business, the proportion is 66.67%. Current expenses of $3,000 would then produce about $2,000 attributable to business, subject to each expense's treatment. The regular commute between home and a usual workplace may be personal. Keep the date, destination, purpose and distance of each trip. An incomplete logbook weakens the proportion during an audit.
CCA is not a current expense: A computer, vehicle or durable equipment may belong to a depreciation class. A rate like 55% does not always mean 55% of the price is immediately deductible: class, half-year rule and temporary measures must be checked.
Three mistakes that invite corrections
- Mixing personal and business purchases with no allocation method or supporting documents.
- Deducting 100% of ordinary meals or personal trips because a client was mentioned during the day.
- Treating a durable asset as an immediately consumed supply, without checking the CCA class.
Create a monthly folder with invoices, receipts, contracts, statements and explanatory notes. A card statement proves a payment happened, but not necessarily what was bought or its business purpose. For taxes, also keep the information required on the invoice to support input tax credits when you are entitled to them.
The CalculQuébec calculator adds amounts according to the indicated percentages to build a net income scenario. It does not decide whether an expense is legally eligible. A mixed situation, an expensive vehicle, a business loss or a capitalized purchase often justifies a check with an accountant.
Frequently asked questions
Can I deduct my phone in full?
Only if the use is entirely business-related and defensible; otherwise, use a documented proportion.
Are taxes part of the expense?
The treatment depends notably on your registration and the input tax credits claimed.
How long should I keep my documents?
Follow the CRA and Revenu Québec requirements that apply to your file; do not throw documents away right after filing.