Whether you are fully self-employed, or have a full-time job and earn self-employed income on the side, the Income Tax Act (ITA) provides guidelines which allow you to deduct a range of business expenses. These expenses are necessary to offset your net income, lowering your income and reducing your taxes owing.  These guidelines are limited to a few specific items, which means that the Canada Revenue Agency (CRA) then has the responsibility to determine if the expense was incurred for the purpose of earning income and whether they will be allowed or denied.

Here are the main deductions which you may be eligible to claim.

Office and Home Office Expenses

If you rent an office, you can deduct the rent and any ancillary expenses for that space.

If you have a home office you can deduct its cost.

To determine yourhome office expenses, calculate the size of your home office as a percentage of your home’s total size.For example, if your home office is 20 square meters and your home is 200 square meters, your office is 10% of your home, which means you are able to deduct 10% of your mortgage interest or rent, utilities, home insurance, security monitoring fees, repairs and other related costs on your self-employment income tax return (T2125).