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Tax write offs are business costs you subtract from revenue before working out tax. The trick is claiming only the business part: if 70% of your driving is for work, 70% of the car costs go on the return, and the rest stays personal.
What does a write off do to your tax bill?
It lowers net income, so it lowers tax on that income, and for a sole proprietor it lowers CPP too. Nothing comes back as a cheque. The saving is a share of the cost, and the share depends on your bracket.
Here’s the vehicle case with real numbers. You drive 18,000 km in a year and 12,600 of it is for the business. That’s 70%. Running costs come to $9,000, so $6,300 is the business share. In the self-employed tax calculator, an Ontario sole proprietor with $80,000 of net income before this claim pays $22,126 in income tax and CPP. Take off the $6,300 and net income is $73,700, so the total is $19,725. The write off saves $2,401.
So the $6,300 you spent on the business share really cost you about $3,900. That’s why keeping a kilometre log matters more than most people think.
Which tax write offs are worth checking first?
Start with the ones tied to how you actually work. The CRA sets a condition on each, and a few come with a cap or a split.
| Write off | Condition or limit from the CRA |
|---|---|
| Vehicle costs | Business kilometres over total kilometres, tracked separately |
| Meals and entertainment | 50% of the lesser of actual and reasonable |
| Home workspace | Principal place of business, or exclusive use plus regular client visits |
| Conventions | Up to two a year |
| Purchases that last | Capital cost allowance, not an immediate write off |
For meals, $1,200 of client lunches gives you $600 to claim. Don’t be surprised when the number is half of what’s on the statements.
What can’t you write off?
Fines and penalties, tax interest, personal spending and money you take out for yourself are out. Charitable donations and most life insurance are out too.
Passenger vehicles come with limits on capital cost allowance, interest and leasing costs, and the CRA sets those amounts each year. We haven’t printed the current caps, since we couldn’t confirm them. Check the CRA’s vehicle guidance if you’re buying.
Does a big purchase count as a write off?
Not in one go. A laptop, a truck or a renovation with lasting value is a capital expense. You spread the deduction through capital cost allowance instead. Small repairs that keep something working are current expenses, and those you write off in the year.
The gray zone sits between the two. A repair that quietly improves the property beyond its original state can be pushed to the capital side. When in doubt, ask yourself if it’ll still be earning money for you in a few years.
The classes and percentages are set by the CRA. We didn’t verify them for this page, so we’ve left the rates out.
How do you keep write offs safe?
Keep proof for six years from the end of the tax year, and keep it in a form you can find. That means receipts, the kilometre log and bank statements together. You don’t need a fancy system.
We won’t guess what triggers a review, because the CRA doesn’t publish a list and we found none. A sensible claim with paper behind it is your best position. A claim that looks like personal spending dressed up as business is the weak one. Short sentence: don’t do it.
Once profit is steady, the tax instalments calculator shows if you’ll be asked to pay during the year. And for the GST/HST side of costs, the GST/HST calculator splits a price into the tax and the base. On a business expense, the tax you paid, less any input tax credit you claim, can be part of the deduction.
Where the numbers come from
Rules come from the Canada Revenue Agency guide T4002, chapter 3, and its page on business use of home, read in September 2026. The examples are our own arithmetic, using 2026 federal and Ontario tax data and CPP for a sole proprietor. This site has no link with the CRA or any government.
Frequently asked questions
What is a tax write off?
A business cost you subtract from revenue before working out tax. It lowers your tax by a share of the cost, not the whole amount.
Can I write off my whole car?
Only the business share, worked out from business kilometres over total kilometres.
Why is my meal write off only half?
The CRA limits food, drink and entertainment to 50% of the lesser of the amount spent and a reasonable amount.
Is a computer a write off?
It's treated as a capital purchase, so you claim it through capital cost allowance over time rather than all at once.
How long do I keep the proof?
Six years from the end of the tax year the records relate to.
- Self-employed taxes in Canada: income, CPP and GST
How tax works when you are self-employed in Canada: reporting income and expenses, paying both halves of CPP, instalments and when to register for GST
Information only. This page is general information, not tax, legal or accounting advice. Tax-Services.ca is an independent publisher: we don't prepare or file tax returns or offer tax services, and we have no connection with the CRA, Revenu Québec, any government or any company named on this page. Check the figures that matter with an official source or a qualified professional.