Top 6 Most Commonly Overlooked Tax Deductions for Canadian Small Businesses


Canadian business owners can maximize tax deductions to bring down their tax liability or even get a tax refund. However, this write-off often requires a valid reason and meets the Canada Revenue Agency’s (CRA) criteria.

A trusted accounting and bookkeeping service can help ensure that business expenses are accounted for and determine which costs are qualified for tax benefits. Furthermore, using a small business bookkeeping app can help in streamlining the process and minimizing errors commonly associated with manual operations.

It is essential to be familiar with different tax benefits that business owners can be qualified for. With that, here are some of the business tax deductions that one might overlook.

  • Home-Based Business Tax Deduction

Many entrepreneurs operate their businesses at home due to the pandemic. It is helpful to know that a portion of the rent, utilities, and other home expenses might be eligible for a tax deduction. According to the Canada Revenue Agency (CRA), it can be eligible if your home is the primary place of business, and the space is exclusively for businesses to earn income and hold meetings.

  • Scientific Research and Experimental Development Tax Credits

It can be a misconception that scientific research and experimental development tax benefits are only for large businesses or incorporated companies. However, even a sole proprietorship or a partnership business is still qualified if requirements are met. Additionally, this tax deduction is refundable.

  • Vehicle Expenses

Fuel, motor oil, and other vehicle expenses can also be eligible for tax credits as they are often claimed as business-use-of-home expenses. It can be challenging to monitor tax deductions from vehicle expenses, but a free invoice maker app can help organize records.

  • Wages and Payroll Taxes

The cost of employee wage also counts as a business expense, making it qualified for a tax write-off.

  • Childcare Expenses

Another qualified expense for a non-refundable tax deduction is childcare expenses, especially for companies that provide a licensed child care facility to benefit their employee’s children. Its tax credit amount is around $10,000 per child care space or 25% of the eligible costs for each child care space in the building.

  • Advertising and Marketing

Various forms of advertising can also be written off as a small business expense as it also includes payments referred to as a finder’s fee. However, it is not applicable when advertising on a foreign website.

If you want to learn more about the most commonly overlooked tax deductions for Canadian small businesses, here is an infographic provided by Kippin.

Top 6 Most Commonly Overlooked Tax Deductions for Canadian Small Businesses