What Your Online Business Can Actually Write Off
If you run an online business in Canada, you can write off your software subscriptions, equipment, website and hosting, platform and payment-processing fees, professional development, coworking space, and a portion of your home office. The ones people miss most often are processing fees, business use of a personal phone, and subscriptions they have forgotten they are paying for.
Here is something a client said to me that I think about a lot:
“I don’t know a lot about business taxes and I think I’m leaving money on the table because I don’t know what expenses I can claim.”
She wasn’t careless. She was running a good business and paying someone to do her taxes. She just had the quiet, nagging sense that she was overpaying and no way to check.
She was right. She was leaving money on the table.
Why didn’t my accountant tell me?
I worked with two clients in the alternative health space — one an acupuncturist, one a Reiki practitioner. Both had been to a traditional accountant. Neither had been asked a single question about what their actual work involved.
So I asked. Are you writing off your candles? Your incense? The bedding and linens you have to buy to deliver the service? For the energy healer — the crystals?
Nobody had asked them. Not because their accountant was bad at tax, but because their accountant had no idea what a session with an alternative healer actually looks like. You can’t suggest an expense you can’t imagine.
If the person doing your taxes doesn’t understand how your business runs, you are not getting a worse service because they are careless. You are getting a worse service because they have nothing to work with.
Another client put it more bluntly: “I’ve interviewed a few accountants but honestly, I always leave feeling dumb for not understanding.” If that is your experience, you are in very normal company, and it is not a reflection on you.
What can an online business actually write off?
Online businesses have a particular problem. You don’t have rent, hydro, a storefront or a delivery van. Fewer obvious expenses means more profit — which sounds great until you see the tax bill. It cuts both ways.
So the expenses you do have matter more. The ones people routinely forget:
Every software subscription. All of them. The scheduler, the email platform, the design tool, the cloud storage, the thing you signed up for eighteen months ago and still pay for.
Your equipment. Computer, camera, microphone, lighting. And your phone — if you are running social media for the business on it, a portion of that bill is a business expense. How much depends on your situation; it might be 50%, it might be more.
Your website, your domain, your hosting.
Platform and processing fees. Everything Stripe, Square, PayPal, Shopify, Etsy or your course platform takes off the top. These add up fast and get overlooked constantly, because they never appear as a payment you made — they are deducted before the money reaches you.
Professional development. A course, a certification, training that makes you better at something your business needs. A coach.
Coworking space, every time you go. This does not include coffee shop work sessions — different rules apply, and they are below.
Your home office — a portion of rent or mortgage interest, utilities, internet and phone.
What if it is an asset rather than an expense?
If you buy something that keeps its value and stays with the business for years — a good camera, a laptop, office furniture — it usually isn’t written off all at once in the year you bought it. It goes in a different section of your return and gets claimed over time.
A common rule of thumb is that purchases over about $500 get treated this way. That is a bookkeeping convention rather than a number written into the Income Tax Act, so treat it as a sorting guide, not a hard line. If you are near it and unsure, ask — the answer depends on what the thing is and how long it will last, not just the price tag. It also depends on the rules in the year you are filing; governments often offer faster write-offs on assets as a way to encourage businesses to spend.
How many conferences and courses can I claim?
This is where I see a rule get repeated wrongly, so it is worth being precise.
Conventions have their own limit. CRA lets you deduct the cost of attending up to two conventions a year. The convention has to relate to your business or professional activity, and it has to be held by a business or professional organization within the geographical area where that organization normally does business. A Canadian association’s annual event held in Canada is fine. The same association running it somewhere sunnier usually is not. There is an exception where an organization from another country sponsors the convention and it relates to your work.
One detail that catches people: if the convention fee includes food, drinks or entertainment and the organizer doesn’t itemise it, you subtract $50 for each day they provided it — and the usual 50% meals limit then applies to that $50. The full rules are on CRA’s own page on convention expenses.
Courses and training are not conventions. Training that keeps the skills you use in your business current is an ordinary business expense, and the two-a-year cap does not apply to it. The two-per-year rule gets quoted as though it governs all professional development. It doesn’t.
Does buying before year end save me more tax?
Not in the way people think — and the date that matters may not be December 31 at all.
If you are a sole proprietor, your business year ends December 31, so a December purchase lands in this year’s return and a January one lands in next year’s. If your business is incorporated, your year end is whatever date your corporation uses — it might be June 30, or October 31, or any other month end — and December has no special meaning at all. Check which one you are before you plan around a date.
Either way, buying before your year end moves the deduction into this year rather than next. What it does not do is make the purchase free. You spend a dollar to save perhaps twenty-five or thirty cents of tax, depending on your rate — so something you did not actually need is still seventy cents out the door, and seventy cents of cash flow gone.
A better rhythm, whenever your year end falls:
Early in your year — plan the major purchases, review every subscription you are carrying, set a spending budget.
Through the middle — make the investments, and track whether they did what you hoped.
Coming up to year end — review what is genuinely needed. Don’t panic-buy.
For anything under that $500 line, buy it when you actually need it.
What will get denied?
The coffee shop lunch. Going to Starbucks to use the wifi and writing off the sandwich is not a business expense. Meals and entertainment only count when you are actively there to generate income — you are meeting someone, and you are talking about business.
The test: can you write on that receipt who you were with and why? If you can’t, it will be denied when someone eventually looks. Get in the habit of writing it on the receipt at the table, not reconstructing it in March.
And even when the meal does qualify, you don’t get all of it. CRA limits meals and entertainment to 50% — specifically, 50% of the lesser of what you actually spent or an amount that is reasonable in the circumstances. A modest lunch with a client is half deductible; an extravagant one may be limited further before the 50% is even applied. The details, including the handful of exceptions, are on Line 8523 – Meals and entertainment.
Coaching that is out of proportion to your income. This one is specific to the online space and it catches people. You can absolutely write off a coach. But if you pay a coach $15,000 and the business brings in $1,000, CRA is going to look at that ratio. You might get away with it for one year. Keep the spend in proportion to your business stage.
This isn’t a rule against coaching. It is a caution about proportion — which matters for your cash flow as much as it does for your taxes.
How far can I push an expense?
When people ask me this, there is only one test I give them:
Can I confidently argue why this is an expense for my business — and specifically for the kind of business I run?
Not “is it on a list.” Not “did someone on Instagram say you can.” Can you sit across from a CRA reviewer and explain it without flinching?
Do you need a large monitor for what you do? Maybe a TV is cheaper than a very large monitor, and maybe that is a defensible purchase. But you have to be able to have that conversation.
If you can, ask the question. The worst outcome is a no. Most people never ask, and that is where the money actually gets left behind.
What about my home office?
Worth doing, and fiddly the first time. You work out the portion of your home the office takes up, then account for how much of that space’s time is business use rather than everything else.
It is a genuinely convoluted calculation on the first pass. The good news is that once you have done it and you haven’t moved, you reuse the same formula every year after.
There is more detail — including the part almost everyone gets wrong about where internet belongs — in home office expenses: what you can actually claim.
How do I actually track all this?
None of the above helps if the receipts are scattered across your email, a shoebox and three different accounts.
Set up a deductions folder, alongside your income folder.
Organise by vendor, not by month. Month folders feel tidy and are miserable to search when you are trying to find every payment to one supplier. Vendor works better for most people — but pick one and label things properly either way, with the date and the vendor name.
Get receipts out of your email and into one place. We use Hubdoc with clients and like it. Dext is another good option. Whatever you use, the goal is that at year end you are looking in one place rather than five.
Keep them for six years. That is CRA’s requirement. Digital receipts that arrived digitally don’t need a paper copy, but they do need to be somewhere secure for the full six years.
Your free tax expense checklist
Curious about the most common expenses when you are running an online business? Grab the free guide below — it includes links through to the detail on CRA’s own site.
Where does this leave you?
Two things are true at once: most people are missing legitimate expenses, and most people are also nervous about claiming things they shouldn’t.
Both problems have the same root. Nobody has walked you through what applies to your business. Not a generic list. Yours.
If you want to know whether your books are actually capturing what they should be, that is what a Books Check-Up is for — an independent review of your file, a recorded walkthrough of what we find, and a written list of what to fix.
And if the thing you are unsure about is GST/HST rather than expenses, start here instead.