The short answer
What can a Canadian freelancer write off? You can deduct any reasonable expense you paid to earn your business income. That is the whole test the Canada Revenue Agency applies: was the cost reasonable, and was it there to help you make money. Rent on your workspace, the software you invoice through, the portion of your phone bill you use for client calls, all of it counts. A personal cost dressed up as a business one does not, and that line is where most people get themselves into trouble.
The reason write-offs matter goes beyond the refund. Your income tax and your CPP contributions are calculated on your net income, the amount left after these deductions, rather than on everything a client ever paid you. If you set aside money for taxes on your gross revenue, every legitimate expense you track is money you were about to over-save. Deductions are the difference between the two numbers.
What actually counts as a deductible business expense?
A deductible expense is one that is reasonable in amount and incurred to earn business income. If a cost is purely personal, it stays personal. If it is genuinely mixed, you deduct only the business share. Your groceries are not a business expense; the coffee you bought while meeting a client might be half of one. The CRA does not hand you a tidy list of approved purchases, because the test is about purpose, so the honest question to ask of any expense is simple: would you have paid this if you did not run this business? If the answer is no, it is probably deductible in whole or in part.
Can I write off my home office?
Yes, if you use the space regularly and only to earn business income. You deduct the business-use portion of your home costs, which means a share of your rent or mortgage interest, utilities, home insurance, property tax, and maintenance. The usual way to figure the share is by area: the square footage of your workspace divided by the total square footage of your home. If a quarter of your apartment is a dedicated office, roughly a quarter of those running costs comes into play.
Two catches worth knowing. Business-use-of-home expenses cannot be used to create or deepen a business loss, so if your home-office claim is bigger than your profit, you carry the unused part forward to a future year rather than losing it. And the space has to be a genuine work area used for the business, so the kitchen table you also eat dinner at is a harder claim than a spare room set up as an office.
What about my phone, internet, and software?
The business-use portion of each is deductible. Your invoicing tool, your design software, your project management subscriptions, the paid plan on whatever you actually run the business through, all deductible in full when they exist for the work. Your phone and home internet are usually mixed use, so you deduct a reasonable business percentage rather than the entire bill. If roughly 60% of your phone use is client work, deduct 60%. Pick a share you could defend if someone asked, write it down, and be consistent.
Can I deduct meals and my car?
Both, with limits. Meals and entertainment are generally deductible at 50% of what you spend, so a client lunch that cost forty dollars is a twenty-dollar deduction. That 50% cap is a standing CRA rule for most self-employed people, so do not deduct the full amount.
For a vehicle you use for both business and personal driving, you deduct only the business-use portion of your running costs: fuel, insurance, maintenance, registration. The way you prove the split is a logbook. Track your total kilometres for the year and the kilometres you drove to earn business income, and for each business trip note the date, where you went, why, and how far. If a third of your driving was for the business, roughly a third of those costs is deductible.
What can I not write off?
Purely personal costs, the personal share of anything mixed, and, importantly, big equipment all in one year. Everyday clothing is not deductible even when you wear it to meet clients, because the CRA treats regular clothes as personal. The half of your car that is personal driving is out. And a laptop, camera, or other lasting equipment is usually not deducted in full the year you buy it. Instead you claim it gradually over several years through capital cost allowance, which spreads the deduction across the useful life of the asset. Supplies you use up quickly get deducted now; assets that last get deducted slowly.
Do I actually need to keep the receipts?
Yes, and this is the part that quietly sinks people. Every deduction you claim, the CRA can ask you to support, and a bank statement line is weaker proof than an itemized receipt. The practical fix is to stop hoarding paper and start photographing receipts the day you get them, before the thermal ink fades to a blank strip. Keep them organized by the same categories you will use at tax time, and the annual scramble turns into a five-minute export.
There is one more lever if you are registered for GST/HST. Once you are registered, you can claim input tax credits on the GST or HST you paid on business purchases, which effectively refunds that sales tax back to you. That is a separate mechanism from income tax deductions, and it is one of the real reasons some freelancers register voluntarily before they hit the mandatory threshold. We cover when that threshold kicks in over on our GST/HST guide.
Get in the habit of tracking expenses as they happen and the write-offs take care of themselves. The freelancers who dread tax season are almost always the ones reconstructing a year of spending from memory at tax time. The ones who log each cost the week it lands just run an export and move on.
How Loot helps
Loot will not file your taxes, and it is honest about that. What it does is keep the record clean so the write-offs are easy to claim and easy to prove. Log every business expense on the same dashboard where you send invoices and track payments, keep them sorted by category as they happen, and export the whole year as a clean CSV when it is time to file or hand things to an accountant. Once you are registered, the GST and HST you pay on business purchases sits as its own labelled line, ready for the input tax credit. It works the same whether you are invoicing under your own name as a sole proprietor or you have decided to incorporate. The tool that gets you paid and the tool that keeps your deductions in order are the same tool, so nothing falls through the gap between them.
Frequently asked questions
Do I need to be incorporated to write off business expenses? No. A sole proprietor deducts business expenses on the same reasonable-and-incurred-to-earn-income basis as an incorporated business. You claim them against your self-employment income when you file. Incorporation changes other things, but it is not what unlocks write-offs.
Can I write off expenses if I freelance part-time alongside a job? Yes. As long as the freelance work is a genuine business run to earn income, you deduct its reasonable expenses against its income, regardless of whether you also have employment income. The two are tracked separately when you file.
How much of my phone and internet can I deduct? Only the business-use share. Estimate a reasonable percentage based on how much you use each for the work, deduct that portion, and keep a note of how you arrived at the number so you can defend it. Deducting the whole bill when the use is mixed is a common error.
Are meals with clients fully deductible? No. Meals and entertainment are generally deductible at 50% for self-employed people in Canada. Keep the receipt and record who the meal was with and why, then claim half the cost.
What happens if I claim a deduction I cannot support? If the CRA reviews your return and you cannot back a claim with a receipt or record, it can be disallowed, which raises your taxable income and can add interest. Keeping itemized receipts, photographed and organized as you go, is what protects the deductions you are entitled to.
This is general information for Canadian freelancers and no substitute for tax or accounting advice. What you can deduct depends on your income, your province, and your personal situation, and the rules change, so confirm your own numbers with a qualified accountant or the CRA before you file. For more on the tax side of freelancing, our guides walk through GST/HST and registration.