This calculator is for planning estimates only and does not replace CRA guidance or professional tax advice.
Follow the steps in order, or jump to the calculator that matches your question.
How expenses affect your tax — key concepts
Revenue vs. profit
Self-employed tax is generally based on net business income, not gross revenue. Net income means business revenue minus deductible business expenses.
Business-use portion
If an expense is partly personal and partly business, only the business-use portion should generally be claimed.
Tax savings from expenses
A deduction reduces taxable business income. The actual savings depend on your income level, province, CPP, and other tax factors.
Advertising and marketing $0
Advertising and promotion costs related to earning business income.
Vehicle expenses $0
Home office $0
Phone and internet $0
Only the business-use portion should generally be included. Avoid double-counting internet already included under home office.
Software and subscriptions $0
Accounting software, design tools, cloud storage, industry software, website tools, domain/hosting.
Office supplies $0
Stationery, printer supplies, small office items used for business.
Professional fees $0
Meals and entertainment $0
Travel $0
Travel meals are calculated separately and multiplied by the meals allowable percentage. Transportation, hotels, and other travel use the business-use percentage.
Subcontractors and outside services $0
Rent / coworking / studio space $0
Separate from home office. Use this for external office, coworking membership, or studio rental.
Business insurance $0
Professional liability, errors and omissions, or other business insurance policies.
Bank charges and interest $0
Other business expenses $0
Any other business expenses incurred to earn self-employment income.
Planning estimate only — not tax advice. This calculator does not determine whether an expense is legally deductible, and does not include CCA, GST/HST ITCs, RRSP deductions, surtaxes, or other deductions and credits. Ontario and British Columbia supported. Confirm your situation with the CRA or a qualified tax professional.
| Category | Total entered | Business-use / allowable | Est. deductible |
|---|---|---|---|
| Advertising and marketing | — | — | — |
| Vehicle expenses | — | — | — |
| Home office | — | — | — |
| Phone and internet | — | — | — |
| Software and subscriptions | — | — | — |
| Office supplies | — | — | — |
| Professional fees | — | — | — |
| Meals and entertainment | — | — | — |
| Travel | — | — | — |
| Subcontractors | — | — | — |
| Rent / coworking / studio | — | — | — |
| Business insurance | — | — | — |
| Bank charges and interest | — | — | — |
| Other business expenses | — | — | — |
| Total estimated deductible expenses | — | ||
This calculator assumes
- You are a self-employed individual or sole proprietor, not an incorporated business
- You are estimating 2026 tax impact
- The expense amounts entered were incurred to earn business income
- Personal-use portions are excluded through the business-use percentage fields
- Meals and entertainment are limited by the allowable percentage entered, defaulting to 50%
- Vehicle expenses are estimated using the business-use percentage entered
- Home office expenses are estimated using the workspace percentage entered
- CCA/depreciation is not included
- GST/HST input tax credits are not included
- EI premiums are not included
- RRSP deductions, credits, surtaxes, and special deductions are not included
- Ontario and British Columbia are supported in version 1
- This is not tax advice
What this estimate does not include
- Whether an expense is legally deductible
- CCA/depreciation or capital asset classes
- Vehicle CCA, lease limit rules, or standby charge rules
- Inventory and cost of goods sold
- GST/HST input tax credits
- Quebec QST
- Incorporated business expenses
- Employee expense claims
- Detailed business loss rules
- Industry-specific restrictions
- Reimbursements from clients or employers
- Tax penalties, interest, or CRA audit risk
How self-employed expenses work in Canada
Self-employed Canadians generally report business or professional income and expenses on Form T2125 (Statement of Business or Professional Activities). That form is filed with the annual T1 personal income tax return.
Business expenses may reduce net business income when they are connected to earning income and are reasonable in the circumstances. The CRA generally requires that an expense be incurred for the purpose of earning income — not for personal reasons — and that it be supported by receipts or records.
This calculator estimates the income tax and CPP impact of entering different expense amounts. It does not approve or validate any specific expense, and it does not replace CRA guidance or advice from a qualified tax professional.
Business-use percentage
Many expenses are mixed-use: used partly for business and partly for personal purposes. A phone, vehicle, internet plan, or home workspace may fall into this category. In general, only the business-use portion should be claimed.
There is no single rule for how to calculate the business-use percentage, but the method should be reasonable and supportable:
- Vehicle: business kilometres divided by total kilometres driven in the year
- Home office: workspace area as a proportion of total home area, or time-based methods where applicable
- Phone and internet: estimated proportion of business calls, data, or time relative to total use
Keep records that support the percentage you claim. If the CRA reviews your return, you may need to provide documentation explaining how the percentage was determined.
Common expense categories
Advertising and marketing
Costs to promote the business: online ads, website costs, printed materials, social media, and similar items.
Vehicle expenses
Fuel, insurance, repairs, lease payments, loan interest, and parking — multiplied by the business-use percentage. CCA on a vehicle and specific lease/interest limits are not included here.
Home office
Rent or mortgage interest, utilities, internet, insurance, and other home costs — multiplied by the workspace percentage. CRA conditions apply.
Phone and internet
Mobile phone bills and internet service used for business, to the extent of business use.
Software and subscriptions
Accounting software, cloud tools, design applications, website hosting, domain names, industry-specific software.
Professional fees
Accounting, bookkeeping, legal, and other professional services incurred for the business. Professional memberships and licence fees may also apply.
Meals and entertainment
Business meals and entertainment, generally limited to 50% of the eligible amount. Special rules can apply for certain types of events.
Travel
Business travel costs including transportation, accommodation, and meals away from home. Travel meals are subject to the 50% limitation.
Subcontractors and outside services
Payments to subcontractors, freelancers, or outside service providers for work done on behalf of the business.
Rent and coworking
Rent paid for a dedicated business space or coworking membership, separate from any home office claim.
Insurance
Professional liability, errors and omissions, and other business insurance premiums.
Bank charges and interest
Business bank account fees and interest on business loans used to earn income.
Expenses reduce tax, not dollar-for-dollar
A $1,000 deduction does not usually save $1,000 in tax. A deductible expense reduces your net business income, which in turn reduces the income on which you owe tax and CPP. The actual tax savings depend on several factors:
- Your marginal federal and provincial income tax rate at that level of income
- The CPP reduction on lower net self-employment income
- Other income, deductions, and credits on your return
For a self-employed person in Ontario at $85,000 of gross revenue, a $1,000 deductible expense might save approximately $350–$450 in combined income tax and CPP, not $1,000. The "effective savings rate" shown in this calculator approximates that percentage across all entered expenses.
Frequently asked questions
Is this calculator tax advice?
No. It is an educational planning estimate only. It does not determine whether an expense is legally deductible.
Are self-employed people taxed on revenue or profit?
Generally, self-employed Canadians are taxed on net business income: gross revenue minus deductible business expenses.
Can I deduct the full cost of my phone or internet?
Only the business-use portion should generally be included if the expense is used for both business and personal purposes.
Can I deduct vehicle expenses?
Vehicle expenses may be deductible to the extent the vehicle is used to earn business income. You should keep records of total kilometres and business kilometres.
Can I deduct home office expenses?
Business-use-of-home expenses may be deductible if CRA conditions are met. This calculator estimates the workspace percentage but does not determine eligibility.
Are meals and entertainment fully deductible?
Often no. Meals and entertainment are commonly limited to 50% of the eligible amount, though special rules can apply.
Does this include GST/HST input tax credits?
No. This calculator estimates income tax and CPP impact. GST/HST input tax credits are separate and depend on your GST/HST registration status and eligible purchases.
Does this include CCA or depreciation?
No. CCA/depreciation and capital asset rules are excluded from version 1. CCA involves asset classes, declining balances, and half-year rules that require a more detailed calculation.
Can incorporated businesses use this?
No. This calculator is for self-employed individuals and sole proprietors. Corporations are taxed separately under different rules.
Why are my tax savings lower than my expenses?
Expenses reduce taxable income. The savings depend on your tax rate and CPP impact, so a deduction usually saves only a percentage of the amount spent — typically 30%–50% depending on your province and income level.
Self-Employed Tax Calculator
Once you have estimated your deductible expenses here, use the Self-Employed Tax Calculator to estimate total income tax, CPP, and how much to set aside from your self-employment income.