There is no actual limit for expense deductions for your small business, however, there are limits to claiming certain deductions if they exceed the income you have earned from that business.
The categories for your business expenses include:
- Current expenses - Expenses you incur that relate directly to your business and earning a profit. Some examples are: Supplies, Advertising, Meals & Entertainment, Office Supplies, Vehicle Expenses, Phone & Internet, etc.
- Business Use of Home Expenses - You can claim a percentage of your home expenses against any income you have earned from the business. This includes Rent, Utilities, Property Tax, Mortgage Interest, Insurance, etc. There is a limitation on claiming these expenses in that you cannot create or increase a business loss by claiming them, and you are able to carry any unused amounts forward to the next year. IE: If your "net business income" was $5,000 and your percentage of home expenses was $7,500, you could only claim $5,000 to reduce your net income to Zero. You would then carry forward $2,500.
- Capital Expenses - These include items you use in business that have a lasting value and rather than claiming the entire cost, you claim a percentage over a period of years. The deduction is called Capital Cost Allowance, commonly called "depreciation". Different items belong in different "classes" and have different percentage rates. Some examples are: Furniture & Equipment - Class 8 20%, Motor Vehicles - Class 10 (or 10.1) 30%, Buildings - Class 1 4%.
- In the year you purchase an item, you are subject to the half-year rule, and you must prorate these items according to any personal use.
The following link from TurboTax has more information on the different claims:
Also, here's a great link to the CRA guide on claiming these expenses for your business:
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