American businesses have it easy compared to Canada – at least in the area of business expense writeoffs.
Starting a business is hard at the best of times. You are gambling not only your personal finances, but also a considerable amount of your time as well with no certainties that things will pay off in the end. To be clear, if you are an American working on a business, you are strongly encouraged to look into what kinds of things you can write off as business expenses. A very common reaction from someone who haven’t looked into something like this is that they are absolutely shocked at what can be written off.
Of course, between Canada and the US, it really is a tale of two countries. In the US, it feels like you can write off almost anything. In Canada, you are more likely to be left to your own devices with little to no help from the federal government. This, of course, depends on what business you are in, but if you are in my kind of work, it’s pretty brutal as a Canadian.
So, let’s use myself as an example. I have a number of expenses to try and power my little operation. So, what expenses are involved? This would include the server costs, the Domain Name Server (DNS) costs, the personal computer used to do my work, a desk and chair, internet access, camera equipment (camera, lighting, etc.), software licensing, video games, consoles, and even contract expenses to handle something like re-doing the overall look of the website. So, let’s look at the publicly available information out there to see what you can and cannot write off as a business. Obviously, it’s entirely possible I’ll get something wrong, so I recommend asking a tax professional to confirm what I was able to find.
The Computer
First, let’s start with the actual computer itself. In Canada, unless you lease out computers, then this cannot be written off. From the Canadian website:
If you lease computers, cell phones, fax machines, or other equipment, you can deduct the part of the lease cost that reasonably relates to earning your commission income.
You can also deduct the part of airtime expenses for a cell phone that reasonably relates to earning your commission income. However, you cannot deduct amounts you paid to connect or license the cell phone.
If you buy a computer, cell phone, fax machine, or other such equipment, you cannot deduct the cost. Also, you cannot deduct capital cost allowance or interest you paid on money you borrowed to buy this equipment.
So, basically, the answer is “no”. What bout the US? The answer is very different. From TurboTax:
Computers, laptops, notebooks, tablets: Your business expenses must be necessary, customary, and reasonable, according to the IRS. That means that you have to have a business use for your computer or iPad.
If you work in the computer industry, this is a no-brainer. But if you are a hairdresser, your computer purchase would be necessary and directly related to your business if you needed it to order supplies, keep track of receipts and expenses, etc. If that use requires you to be connected to the internet, then the cost of connectivity will also be deductible, but if your kids use the same device to do their homework and play video games (or you do), then only the business portion of the costs will be deductible.
So, based on this information, if you bought a $3,000 computer, it can be written off in the US if you can show it is necessary for your line of work, but in Canada, the federal government will tell you to pound sand.
Note: For Canadians, the AI Overview answer is wrong. Google pulled the information from the US and applied it to its Canadian answer.
Internet Access
Internet access is oddly different. The Canadian government has this to say about this:
You can include your reasonable monthly home internet access fees as part of your work-space-in-the-home expenses.
So, apparently, yes, this can be written off. If you are travelling, however, it doesn’t look like it can be written off.
Conversely, in the US, the only expense that can be written off if you are travelling. From the TurboTax site:
Internet usage: If you work while on airplanes or in hotels, and you pay for internet connectivity in the air or at the place of lodging, that cost is tax-deductible if it is related to business activities.
This really got me to do a “lolwut” reaction, but that is what the information I have says.
Software Licenses, Server/DNS Costs, Games, and Consoles
This seems to be one area that both the Canadian and US system seems to agree on. The Canadian government website says this:
You can deduct any annual licence fees and some business taxes you incur to run your business.
You can also deduct annual dues or fees to keep your membership in a trade or commercial association, as well as subscriptions to publications.
You cannot deduct club membership dues (including initiation fees) if the main purpose of the club is dining, recreation or sporting activities.
Meanwhile, in the US, the TurboTax site says this:
Software.: Here’s the bad news first: the latest gaming software doesn’t qualify for a deduction unless you are in the gaming industry and need it for work.
But, if you buy Quickbooks Self-Employed to keep track of your business income and expenses and TurboTax Self-Employed to prepare your self-employed tax return, those expenses will probably qualify. It is likely that the standard office suite programs for word processing and spreadsheets will as well. Of course, if the software has both business and personal usage, you may not be able to deduct the full cost.
So, for games, the answer seems to generally be “no”, but if you pay a subscription fee – especially a yearly subscription fee, then the answer is “yes”. This is especially true for tax software, but it’s not entirely clear if this also applies to other kinds of software in general.
The Desk and Chair
In Canada, the answer appears to be “No” per the Canadian government website:
You can deduct office expenses for small items such as pens, pencils, paper clips, stationery, and stamps. However, you cannot deduct expenses for capital items such as calculators, filing cabinets, chairs, and desks. These are capital items. For more information, see Guide T4002, Self-employed Business, Professional, Commission, Farming, and Fishing Income.
Meanwhile, the US, the answer apparently is “Yes”. From TurboTax:
Many people still see the home office deduction as a potential red flag for auditing, but as telework continues to grow in usage, this is no longer the case. As long as you can meet the IRS criteria for the home office deduction, you don’t need to worry that taking it puts you at higher risk for being audited. Below are some of the home expenses that you may be able to deduct as part of the home office deduction based on the portion of your home used for business.
Office Décor: Furniture used in your home office (desk, chair, table, lamp, artwork, etc.) can be deducted, as can improvements like painting, floor refinishing, and other remodels. Again, it’s all about the use of the space–if you’re using it solely for business purposes, it’s deductible.
So, chalk another win for the US tax system if this information is anything to go by.
Camera Equipment
This is where I couldn’t find a clear answer on this in Canada. Whether it is the camera or lighting equipment related to the camera itself. What I was able to find is that you could write off the insurance incurred from getting this equipment, but not on the cost of the equipment itself.
In the US, there is a bit more information I could find. From TurboTax:
You can also deduct the full expense of business equipment up to $1,250,000 for tax year 2025. In some cases, certain SUV heavy vehicles used for your business also qualify. If you placed a qualified sports utility vehicle in service, you may be able to deduct up to $31,300 for 2025 ($30,500 for 2024).
So, it sounds like the answer is definitely “yes” in the US.
Professional Services
Unsurprisingly, someone in my position will need to contract out for professional services. In this case, doing a facelift of the overall website. So, can that sort of thing be written off? Well, I was able to get this off of the Canadian government website:
Accounting and legal fees
You can deduct the fees you incurred for external professional advice or services, including consulting fees.
You can deduct accounting and legal fees for advice and help in keeping your books and records. You can also deduct fees for preparing and filing your income tax and GST/HST returns.
So, unless it’s services related to legal or accounting, then the answer appears to be “no”.
Meanwhile, in the US, according to Wrike, the answer appears to be “yes”:
Whether you are able to deduct professional services fees depends on the purpose of the service. For example, legal and accounting services that are part of your business’ “ordinary and necessary” expenses can be deducted. Personal legal expenses cannot, however.
So, if you can show that it’s part of your business operation, then you can.
Insurance
Another fun one is whether or not you can write off insurance expenses. According to the Canadian government website, the answer is, uh, this:
Insurance expenses
You can deduct all regular commercial insurance premiums that you pay for buildings, machinery, and equipment that you use for your business.
So, there is a limited list of what you can write off.
Meanwhile in the US, according to NextInsurance, there is this answer:
Business insurance is an expense you pay as a self-employed individual. Similar to how you can deduct the self-employment tax you pay for Medicare and Social Security, you can utilize insurance premium expenses for tax deductions for your small business in many instances.
To get these tax benefits, “a business expense must be both ordinary and necessary,” according to the Internal Revenue Service (IRS).
So, can you deduct insurance premiums on your income taxes? It depends. Not all insurance is classified as ordinary and necessary by the IRS — but many are.
So, it sounds like the answer is “mostly”.
Recap of What I Was Able to Find
I’ll reiterate that I’m not actually an expert on taxes (though I have had experience working in the tax related industry). The type of business can vary as well, so the rules can vary on that front too. So, take these findings with a grain of salt as far as actual financial advice. Still, a little cursory look over what can and cannot be written off between Canada and the US, I was able to find this based on freely available information:
Desktop computer: Canada: No. US: Yes.
Internet Access: Canada: Yes for a home connection. US: Yes for travel connections.
Gaming (consoles or games): Canada: No. US: No.
Software licenses and server/DNS expenses: Canada: Yes. US: Yes.
Desk and Chair (furniture): Canada: No. US: Yes.
Camera equipment: Canada: No. US: Yes.
Professional Services: Canada: Accounting and Legal only. US: Yes.
Insurance: Canada: Some. US: Most.
Generally speaking, based on the information I was able to find, the US system is far more forgiving for business owners when it comes to business write-offs. Canada has a few little carve outs, but from the perspective of someone like me, it’s largely a system with few benefits.
I’ll say this a third time, consult with an actual professional as this was more for a fun little jaunt through freely available tax information. Your business situation very likely differs from others and requires a nuanced look at your specific situation. The above is mostly entertainment only. What I will say is that it is recommended that you look into what things you can write off if you do enter into a business. A lot of people freak out at the idea, thinking that they shouldn’t say anything because they don’t want to get a whole pile of additional expenses that they weren’t expecting. The reality is that for a lot of people, by doing that, they are actually missing out on tax credits that would actually be useful for the businesses. While this is a bit more difficult in Canada, this is especially the case in the US if the information I got is anything to go by.
Drew Wilson on Mastodon, Twitter and Facebook.
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