T2125 Expense Categories
Every line item on the CRA T2125 form, explained with real examples, common mistakes to avoid, and the exact rules for each category.
Most Used Categories
The T2125 expense categories most commonly used by self-employed Canadians.
Advertising
Most advertising is deductible on Line 8521. Where you place the ad sets the rules: Canadian newspapers, periodicals and broadcasters each have their own, and online ads on foreign websites are exempt from them.
Meals & Entertainment
The 50% rule is just the starting point. Learn when you can claim 80% or even 100% of your meals, and how to document every business meal properly.
Insurance
Business liability, E&O and property premiums go on Line 8690. Car insurance, home insurance, health plans and life insurance each go somewhere else — or nowhere.
Interest & Bank Charges
From Stripe fees to business loan interest, every dollar of banking costs you incur for your business is deductible — with a few important caps to know.
Taxes, Licences & Memberships
Professional dues, business licences, and association memberships are fully deductible — but gym memberships and social clubs are specifically excluded.
Rent
Office rent, coworking memberships, and chair rental fees are fully deductible on Line 8910. Home office rent belongs on a different line — here's the difference.
Travel Expenses
Business flights, hotels, and ground transportation are fully deductible — but your daily commute and travel meals follow different rules.
Telephone & Utilities
Dedicated business lines are fully deductible, but home phone and utility costs follow strict rules. Line 9225 doesn't exist — it's all on Line 9220.
Other Expenses
The T2125 catch-all category covers PHSP premiums, software subscriptions, disability modifications, and more. Don't leave money on the table.
Motor Vehicle Expenses
Your vehicle is likely your biggest deduction — but without a logbook, you can't claim a cent. Learn the rules, limits, and how to maximize your claim.
Capital Cost Allowance (CCA)
How CCA classes, first-year rules, business-use percentages and a sale actually play out on Line 9936 — with a worked three-year example for a laptop and a car.
Business-Use-of-Home Expenses
Self-employed? Your home office is claimed in Part 7 of the T2125 and ends on line 9945. Employees claim through a T2200 and Form T777 instead, under narrower rules. This page covers who qualifies, the two conditions, the calculation, and a fully worked example.
Additional Categories
Specialized expense categories for specific industries and situations.
Bad Debts
Write off uncollectable invoices — but only if you already reported the income.
Office Expenses
Pens, paper, toner, and small consumables. Don't confuse with supplies (8811) or capital items (CCA).
Office Stationery & Supplies
Materials consumed in delivering your services — salon products, cleaning supplies, and more.
Professional Fees (Legal & Accounting)
Accountant fees, legal costs, and tax preparation are all deductible on Line 8860.
Management & Administration Fees
Platform fees, brokerage charges, and software subscriptions — the operational costs of running your business.
Repairs & Maintenance
Fix it and deduct it — but improvements that enhance value are capital, not repairs.
Salaries, Wages & Benefits
Employee wages, CPP, EI, and benefits are deductible — but you can never deduct your own salary as a sole proprietor.
Property Taxes
Deduct property taxes on commercial or business premises — but home property taxes go elsewhere.
Fuel Costs (Except Motor Vehicles)
Generator fuel, equipment fuel, and boat fuel — NOT vehicle fuel, which goes on a different line.
Delivery, Freight & Express
Courier, shipping, and freight charges have their own line — don't bury them under Other Expenses.
Stop losing deductions.
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