Top Tax Deductions for Canadian Small Businesses in 2024
As a Canadian small business owner, taking advantage of tax deductions can significantly lower your taxable income, helping you reinvest in your business and achieve your financial goals.
Understanding which deductions are available and how to claim them is essential for maximizing your tax savings.
Here are key 2024 tax deductions you should know about:
Home Office Expenses
If you operate your business from home, you may be eligible to deduct a portion of your household expenses. This includes a percentage of your utilities, mortgage interest, property taxes, home insurance, and even home maintenance costs.
To calculate this, you’ll need to determine the square footage of your home office as a percentage of your total home area.
Vehicle Expenses
If you use your vehicle for business purposes, you can deduct expenses related to its operation, such as fuel, maintenance, insurance, and leasing costs.
It’s important to keep detailed records of your business-related mileage versus personal use, as only the business portion of these expenses is deductible.
Employee Salaries and Benefits
Salaries, wages, and benefits paid to employees are fully deductible. This includes bonuses, commissions, and any fringe benefits such as health insurance or retirement contributions.
Not only do these deductions reduce your taxable income, but they also help in attracting and retaining talent, contributing to the overall success of your business.
Business Start-Up Costs
For new businesses, the CRA allows you to deduct up to $5,000 in start-up costs in the first year of operation. This includes expenses such as market research, advertising before opening, legal fees, and registration costs.
Any start-up costs exceeding $5,000 can be amortized over several years, spreading out the tax benefit.
Marketing and Advertising
Expenses incurred to promote your business, whether through traditional media or digital platforms, are fully deductible. This includes everything from print ads and business cards to social media campaigns and search engine marketing.
Effective marketing is key to driving sales and expanding your customer base, so take full advantage of this deduction.
For a full list of deductions available for small businesses, please visit the CRA website here.
Navigating the complexities of tax deductions can be challenging, but you don’t have to do it alone! We specialize in helping small businesses maximize their tax savings.
Book a discovery call today, and let’s ensure you’re getting every deduction you’re entitled to.