If you work for yourself, you report your business income on Form T2125 and deduct the reasonable costs of earning it. The rules reward good records: the vehicle logbook and receipts are what make a claim stand up.
What you can usually deduct
- Advertising, business licences and professional dues
- Office supplies, software subscriptions and the business share of your phone and internet
- Accounting and legal fees for the business
- Business travel; meals and entertainment are generally 50% deductible
- Rent for business premises, insurance and bank charges
- Equipment and computers, claimed over time as capital cost allowance rather than all at once
Personal costs, fines and penalties, clothing that you could wear every day, and club memberships are not deductible.
Working from home
You can claim part of your home costs if your workspace is your principal place of business, or if you use it only for the business and regularly meet clients there. The business share is usually the workspace area divided by the home's finished area. These expenses can't create or increase a business loss; any unused amount carries forward.
Your vehicle
Vehicle costs are deductible in proportion to business kilometres, so keep a logbook. For 2026, interest on a vehicle loan is limited to $350 a month and lease payments to $1,100 a month plus tax for new loans and leases, and the cost limit for capital cost allowance on a passenger vehicle is $39,000 plus tax.
CPP
Self-employed people pay both halves of CPP: 11.9% of net self-employment earnings between $3,500 and $74,600 in 2026, plus 8% on earnings between $74,600 and $85,000. Half of the base amount and the enhanced portions are deductible.
GST/HST
You must register for GST/HST once your taxable revenue passes $30,000 in a single calendar quarter or over four consecutive quarters. Ride-share drivers must register from their first fare. Many small service businesses in Ontario save money with the Quick Method, which remits a flat 8.8% of tax-included sales, although accountants and some other professions can't use it.