This form is “ground zero” for all your deductible business expenses. What expenses are tax deductible for small businesses?Īs a freelancer, sole proprietor, self-employed business owner, you need to pay particular attention to CRA form T2125, Statement of Business Expenses. The software handles the calculations for you on the corresponding CRA forms. If you use tax preparation software, like TurboTax, you really don’t need to calculate anything. The CRA lets businesses depreciate the business portion of capital costs over a several years and this gives them a tax deduction to offset the cost of investing in their business. Anything you buy for your business that isn’t consumed (like ink or paper) is a capital cost, and it can be depreciated over time. Capital cost allowance is your tax deduction for capital investments you make for your business. CCA is a different beast, but still part of the same species.Check out this detailed explanation of the rules, and examples. Your tax deduction will be a lot higher if the space is only used for business purposes. It also depends on the type of space you use as a home office. The ratio corresponds to the size of your home office space divided by the amount of space in your home.
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