As per the Canada Revenue Agency (CRA) Expenses section of Form T2125
Part 4 – Net income (loss) before adjustments
The following discusses the more common expenses you incur to earn income from your business (including self-employed commission sales) or professional activities. Incur means that you paid or will have to pay the expense.
Generally, you can deduct any reasonable current expense you incur to earn business income. The expenses you can deduct include any GST/HST you incur on these expenses, minus the amount of any input tax credit claimed. However, since you cannot deduct personal expenses, enter only the business part of expenses on the form T2125, Statement of Business or Professional Activities.
In addition, you cannot claim expenses you incur to buy capital property.
Note
When you claim the GST/HST you paid or owe on your business expenses as an input tax credit, reduce the amounts of the business expenses you show on form T2125 by the amount of the input tax credit. Do this when the GST/HST for which you are claiming the input tax credit was paid or became payable, whichever is earlier. Similarly, subtract any other rebate, grant, or assistance from the expense to which it applies. Enter the net figure on the proper line. Any such assistance you claim for the purchase of depreciable property used in your business will affect your claim for capital cost allowance (CCA). If you cannot apply the rebate, grant, or assistance you received to reduce a particular expense, or to reduce an asset's capital cost, include the total on line 8230, Other income, in Part 3C of Form T2125.
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