This is the guide Kwata Books uses to put every expense on a CRA line: on your T2125 if you are a sole proprietor, or in the GIFI if you are a corporation. Your reports, the receipt reader and Lex all follow it, so this page reflects how Books categorises expenses today. When a line changes, this page changes with it.
Checked against CRA's own pages on October 3, 2026. Sources: Form T2125 (2025) and its line pages; Guide T4002, Business and Professional Income; Guide RC4088, General Index of Financial Information (GIFI), Rev. 23. CRA guidance can change. If something here looks out of date, tell us at support@kwatateam.com and we will check it.
Where CRA's guide does not name an expense (for example software subscriptions on T2125), the entry says so and explains the line used. This guide is for bookkeeping, not tax advice. Tax rules depend on your full situation: have an accountant or tax professional review your return before you file, especially for capital property, vehicle use and home-office claims.
Deducted on the business-expenses part of form T2125 (sole proprietors) or the GIFI (corporations).
Belongs here: Advertising, including in Canadian newspapers and on Canadian television and radio; online ads; promotional materials and giveaways.
Not here: Advertising aimed mainly at a Canadian market through a foreign broadcaster is not deductible.
CRA names this. CRA source
Belongs here: Food, beverages and entertainment for business. CRA allows 50% of the lesser of the amount paid and a reasonable amount.
Not here: A few situations allow 100% instead of 50% (for example a party for all employees, or a meal billed to a client). Kwata Books applies the standard 50%; ask your accountant if an exception might apply.
CRA names this. CRA source
Belongs here: An amount owed to you that you cannot collect, if you already included it in income.
Not here: A debt never reported as income is not deductible.
CRA names this. CRA source
Belongs here: Commercial insurance premiums on buildings, machinery and equipment used in the business.
Not here: Vehicle insurance goes to motor vehicle expenses (9281); home insurance to business-use-of-home (9945); life insurance is not deductible.
CRA names this. CRA source
Belongs here: Interest on money borrowed for business purposes, and loan standby charges, guarantee and service fees.
Not here: Interest on personal borrowing or on overdue income tax is not deductible. Payment-processing and account fees go to 8871.
CRA names this. CRA source
Belongs here: Bank account charges and fees for processing payments (for example Stripe, PayPal, Square, Dodo). CRA: "Bank charges include those for processing payments."
Not here: Interest goes to 8710. Currency conversion on a purchase is part of that purchase.
CRA text (T2125 line 8871 page); corporations use GIFI 8715 Bank charges (8716 for credit card charges) CRA source
Belongs here: Annual licence fees, some business taxes, dues to trade or commercial associations, and subscriptions to publications.
Not here: Club dues where the club's main purpose is dining, recreation or sport are not deductible.
CRA names this. CRA source
Belongs here: Small office items such as pens, pencils, paper clips, stationery and stamps.
Not here: Calculators, filing cabinets, chairs and desks are capital (CCA). Software and online services go to software and subscriptions.
CRA names this. CRA source
Belongs here: Items used up in providing your goods or services, for example drugs a veterinarian uses or cleaning supplies a plumber uses.
Not here: Goods you buy to resell go to cost of goods sold (8320). Office stationery goes to 8810. Software is not a supply.
CRA names this. CRA source
Belongs here: Fees for external professional advice or services, including consulting fees and preparing tax and GST/HST returns.
Not here: Legal fees to buy a capital property are added to its cost. Fees for objecting to an assessment go on the personal return (line 23200).
CRA names this. CRA source
Belongs here: Management and administration fees paid to run the business.
Not here: Employee salaries (9060), property taxes (9180) and rent (8910) are not management fees.
CRA names this. CRA source
Belongs here: Rent for property used in the business, such as the land and building where the business is.
Not here: Rent for your home office goes to business-use-of-home (9945). Equipment rental goes to equipment rental.
CRA names this. CRA source
Belongs here: Labour and materials for minor repairs or maintenance to property used to earn income.
Not here: Your own labour is not deductible; repairs that improve or extend an asset are capital (CCA).
CRA names this. CRA source
Belongs here: Employees' gross salaries and benefits, including the employer's share of CPP, EI and other contributions.
Not here: Amounts paid to yourself or a partner (drawings) are not deductible. Corporations report employee benefits at GIFI 8620.
CRA names this. CRA source
Belongs here: Property taxes on property used in the business.
Not here: Property tax on your home goes to business-use-of-home (9945).
CRA names this. CRA source
Belongs here: Public transportation fares and hotel accommodation for business travel.
Not here: Meals while travelling are 50% deductible (meals and entertainment). Your own vehicle goes to 9281.
CRA names this. CRA source
Belongs here: Telephone and utilities such as gas, oil, electricity, water and cable; long-distance business calls, a business-only phone line, the business share of cellphone airtime.
Not here: The basic monthly rate of your home phone is not deductible; home utilities go to business-use-of-home (9945). Corporations report telephone at GIFI 9225 and internet at 9152.
CRA names this. CRA source
Belongs here: Fuel used in the business other than in a vehicle: gasoline, diesel and propane for equipment, motor oil, lubricants.
Not here: Vehicle fuel goes to motor vehicle expenses (9281); home heating to business-use-of-home (9945).
CRA names this. CRA source
Belongs here: Delivery, freight, courier and express charges for the business, including customs and duty on shipments.
Not here: Freight and duty on goods you buy to resell is part of their cost (cost of goods sold, 8320).
CRA text (GIFI 9275 names courier, customs, freight and duty) CRA source
Belongs here: Running a vehicle used for business: fuel, insurance, maintenance, licence and registration, leasing, interest. Claim only the business-use share, backed by a logbook.
Not here: Buying the vehicle is capital (CCA, Class 10 or 10.1).
CRA names this. CRA source
Belongs here: Software subscriptions (SaaS), cloud hosting, web hosting, domain names, and AI or API usage fees.
Not here: Buying a computer or software outright is capital (CCA Class 50 for computers, Class 12 for software). Internet service is telephone and utilities.
CRA's T2125 guide does not name these. Line 9270 is CRA's line for expenses not on a previous line, so they go there, itemised as "Software and online services". For corporations CRA names them: GIFI 9150 Computer-related expenses (9151 software upgrades, 9152 internet). CRA source
Belongs here: Contract labour and subcontracted work for a service business.
Not here: Outside help making the goods you sell is cost of goods sold (8360 Subcontracts). Professional advice (lawyer, accountant, consultant) is 8860.
CRA's T2125 guide does not name service subcontracts, so they go on 9270, itemised. Corporations: GIFI 9110 Sub-contracts ("contract labour, contract work, custom work, and hired labour"). CRA source
Belongs here: Courses, seminars and conventions that maintain or upgrade skills used in the business (CRA allows up to two conventions a year).
Not here: Subscriptions to publications go to 8760. Training that leads to a new degree or qualification may not be deductible.
CRA names conventions under 9270 ("up to two conventions a year"); it does not name courses, so they go on 9270, itemised. Corporations: GIFI 8876 Training expense. CRA source
Belongs here: Renting or leasing equipment and machines used in the business (CRA: "Computer and other equipment leasing costs").
Not here: Rent for premises goes to 8910. Vehicle leases go to motor vehicle expenses (9281).
CRA text: equipment leasing is listed under other expenses (9270). Corporations: GIFI 8914 Equipment rental. CRA source
Belongs here: Expenses incurred to earn income that are not on any other line. CRA asks you to specify them.
Not here: Personal spending is never an expense. If an item fits a named line, use that line.
CRA names this. CRA source
Not an expense line: part of cost of goods sold. Unsold stock at year end becomes closing inventory.
Belongs here: Inventory and goods bought to resell or to make the goods you sell, including the freight and duty to bring them in.
Not here: Goods still unsold at year end are closing inventory (8500), not an expense for this year. Supplies used up in providing a service go to 8811.
CRA text (T2125 Part 3, cost of goods sold) CRA source
Calculated, not deducted as bought.
Belongs here: Buying property that lasts more than a year: computers, phones, furniture, machinery, tools and vehicles. CRA: "If you buy a computer... you cannot deduct the cost"; it is claimed over time as capital cost allowance by class (for example Class 50 computers 55%, Class 8 furniture and equipment 20%, Class 10 or 10.1 vehicles 30%).
Not here: Not deducted in the year you buy it. Small tools under $500 can go in Class 12 at 100%. Leased equipment is an equipment rental expense.
CRA text (T4002 chapter 3 and the CCA classes page). Kwata Books lists these and does not deduct them; the yearly CCA by class is calculated separately (with your accountant if needed). CRA source
Belongs here: The yearly deduction for capital property (computers, furniture, vehicles, equipment), calculated by CCA class.
Not here: The purchase price of a capital asset is not an expense in the year you buy it. Corporations claim CCA on Schedule 8, not in the GIFI.
CRA text (form T2125) CRA source
Belongs here: The business share of home heat, electricity, insurance, maintenance, mortgage interest, property taxes and rent, calculated in Part 7 of T2125.
Not here: The claim cannot create or increase a business loss; the excess carries forward.
CRA text (form T2125 Part 7) CRA source
Kept in your records so nothing disappears, and never deducted.
Belongs here: Personal purchases, personal transfers and anything not incurred to earn business income. Kept for your records, never deducted.
Not here: If part of it was for the business, record only that part as a business expense.
Income Tax Act: personal or living expenses are not deductible CRA source