Discover Eligible Tax Deductions for Independent Contractors in Canada

When tax time rolls around, independent contractors in Canada can claim a number of deductions related to the cost of doing business.

This can work regardless of the field you are in. Independent contractors from writing and editing, truck driving all the way to web design can qualify.

If you're an independent contractor, it's crucial to know which expenses can be claimed as tax deductions to help you save a significant amount of money.

Materials and Supplies

Any expenses related to your work as an independent contractor can be claimed as tax deductions. This includes purchases like computers, printers, and other office equipment used for your business. All items essential for your job are eligible for tax deductions, even smaller supplies such as paper, ink cartridges, and pens. Remember to keep all receipts in case of an audit, as they should be retained for at least seven years.

Office Space

You can claim your office space as a tax deduction. If you rent an office, the money spent on rent can be deducted. Home offices can be claimed as tax deductions if you have a separate room used only for business. Under those circumstances, you can deduct a portion of your mortgage interest, utilities, repairs, insurance and depreciation. You can deduct phone and internet costs by having separate business accounts or by deducting the portion of your Internet and phone bill used for business.

Related Reading: Taxes for Independent Contract Work in Canada

Travel Expenses

If you need to travel to meet a client, deliver a product, perform a service or attend classes related to your business, you can deduct travel costs from your taxes. If you have a separate work vehicle, you can deduct all costs for the vehicle; if you use your personal car for work, you will need to keep track of the mileage used for business trips and deduct according to the current standard kilometer rates. Tolls and parking fees are deductible. You can also deduct the money spent on meals and hotels.

Continuing Education

Business journals, books and online courses can be deducted from your taxes. You can also deduct the cost of continuing education required by law or any classes that improve the skills needed to do your work as an independent contractor. Any related expenses, such as notebooks or textbooks, can also be deducted.

Miscellaneous

Virtually every expense related to doing business is deductible. Association and union fees, provincial sales tax and GST can be claimed. Since CRA tax rules are complicated and subject to change, it’s always best to consult a tax professional so you don’t miss out on any potential deductions.

As you can see, there are many tax deductions for independent contractors that can result in significant savings.

Medical Expenses

If you are an incorporated independent contractor, discover how a Health Spending Account can provide significant tax savings for any medical expenses including common dental checkups and more.

Download our free guide: