Do you know what the CRA won’t let you deduct as expenses for your business? As an Ontario small business owner, it’s tempting to think certain personal or lifestyle-related costs might qualify as tax deductions, especially when they support your professional image. But the CRA draws a clear line between what’s deductible and what’s not. Let’s break it down.
🚫 Expenses That Are Not Deductible
Certain items are routinely flagged as personal, no matter your profession:
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Clothing (unless it’s a branded uniform or protective gear)
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Manicures, makeup, and haircuts, even for those who regularly appear in public or media
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Gym memberships or wellness treatments unless they directly relate to a taxable employee benefit program
Even if these expenses enhance your business presence, the CRA generally sees them as personal.
⚠️ Expenses That Walk a Fine Line
Some costs may be deductible—but only if you can clearly prove the business connection:
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Business meals and entertainment: Only 50% is typically deductible, and receipts must show who attended and the business purpose.
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Home office expenses: Deductible only if your home is your primary place of business or a dedicated workspace used exclusively for business.
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Travel costs: Must separate personal from business portions of a trip, and document the business activities thoroughly.
❓ Ask Yourself These Questions
To stay on the right side of the CRA, ask:
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Was this expense necessary to earn business income?
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Would I incur this cost if I weren’t running a business?
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Can I support this expense with clear, detailed records?
📌 Know What the CRA Won’t Let You Deduct & Keep Them Happy
For meals and entertainment:
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Keep original receipts (not just the credit card slip)
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Record the date, attendees, and business purpose on each receipt
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Avoid vague descriptions—be specific!
Make sure you know what the CRA won’t let you deduct. Stay organized and honest as your best audit prevention strategy. When in doubt, ask your accountant or contact us. It’s better to clarify now than justify (and maybe pay) later.
