If you’re a business owner, you probably already know that your expenses do more than just keep the lights on. But did you know that many of them can actually reduce what you owe during tax season?
Most business owners know they can deduct the basics like rent or office supplies. What tends to get overlooked are the expenses hiding in plain sight, including advertising, marketing, and the professional support you rely on throughout the year. When you know how to claim these properly, the savings can add up quickly.
In this guide, we break down which business expenses qualify, how CRA rules apply, and what you can do to stay compliant while making the most of your small business tax deductions.
Advertising and Marketing Costs: What You Can Write Off
The CRA allows you to claim advertising expenses that are directly related to earning business income. This includes both traditional and digital forms of marketing, as long as they are reasonable and aimed at promoting your products or services in Canada.
Deductible advertising and marketing costs include:
- Digital advertising: Google Ads, paid social media campaigns, email marketing platforms, and search engine optimization (SEO) services.
- Traditional advertising: Newspaper, radio, and television ads, as well as local flyers or billboards.
- Promotional materials: Business cards, brochures, banners, and branded merchandise.
- Website-related expenses: Domain registration, hosting, professional website design, and online listing fees.
- Sponsorships and community promotions: Sponsorships that provide visible advertising benefits for your business.
Certain marketing costs do not qualify. Personal or unrelated expenses cannot be claimed.
You can only deduct 50% of meal and entertainment costs when those are part of a promotional activity.
Keep detailed records for each expense, including invoices, receipts, and campaign summaries. This documentation is your best support if the CRA requests verification. Strategic tax planning can help you understand how to time these deductions effectively and align them with your overall business goals.
Professional Fees and Legal Costs: Claiming Essential Business Support
Professional expertise is a vital part of running a successful business. The CRA allows you to claim professional fees for accountants, lawyers, and consultants if the costs are tied directly to earning income.
Examples of deductible professional and legal fees include:
- Accounting fees: Bookkeeping, preparing financial statements, or filing your business tax return.
- Legal fees: Drafting or reviewing contracts, collecting debts, or addressing business disputes.
- Consulting fees: Supporting your business operations or compliance needs.
However, certain legal fees cannot be deducted immediately. For example, legal costs connected to buying or selling capital property are treated differently. If the legal costs relate to acquiring or disposing of a capital asset—such as real estate, investments, or other long-term holdings—they cannot be deducted as a current expense. Instead, they must be added to the asset’s adjusted cost base (ACB) or deducted against the proceeds when the property is sold, affecting the eventual capital gain or loss.
For depreciable property—like buildings or equipment used in a business—related legal fees are added to the property’s cost and recovered gradually through capital cost allowance (CCA). This means you don’t get an immediate deduction but claim it over time as the asset is depreciated for tax purposes.
Maintaining clear documentation for each professional service helps ensure you can support your CRA deductions if needed.
Memberships and Subscriptions: Often Overlooked Write-Offs
Memberships and subscriptions are another area where businesses can save. If the cost directly supports your business or helps you stay informed within your industry, it generally qualifies as a small business tax deduction under CRA rules.
Examples of deductible memberships & subscriptions include:
- Memberships in professional organizations or trade associations, such as CPA Canada or a local Chamber of Commerce.
- Annual dues for industry networks or business councils.
- Subscriptions to trade journals, professional software, or online databases that support your business operations.
Memberships related to social, dining, or recreational clubs are not deductible, since they are not directly linked to earning business income.
If you subscribe to business-related digital tools, such as accounting software, CRM systems, or marketing platforms, those expenses can also be deducted as part of your business expenses.
Working with a professional who understands how business expenses affect your corporate tax position ensures that every eligible deduction is properly claimed.
Best Practices for Claiming Business Expenses
A strategic approach to claiming small business tax deductions helps you stay organized, minimize risk, and ensure accuracy.
Here are some best practices to follow:
- Keep thorough records. Save receipts, invoices, and contracts that clearly show the business purpose of each expense.
- Separate personal and business finances. Use dedicated bank accounts and credit cards for business transactions.
- Understand CRA rules. The CRA allows any reasonable expense incurred to earn business income, but you must be able to justify it if audited.
- Be consistent. Claim expenses in the year they occur and track year-over-year patterns for accuracy.
- Consult a professional accountant. Tax rules and deduction limits change often. Our accounting and assurance services team can ensure you remain compliant and maximize your tax deduction opportunities.
Advertising, marketing, and professional fees are necessary costs of doing business, but they can also lead to valuable tax deductions when properly documented. By understanding what qualifies, maintaining detailed records, and following CRA rules, you can reduce your business taxes and keep your finances in stronger shape year-round.
If you are uncertain about which business expenses you can claim, or how to organize your records for your business tax return, we can help. Our team specializes in proactive small business tax planning and advisory services designed to help you save more while staying compliant. Request a consultation or call us at 416-646-0550 to get started!