Tax deductions for tradespeople in Canada

The 30-second version

If you're a tradesperson running your own business, your biggest deductions are almost certainly your vehicle, your tools, and a slice of your home or shop space — with meals, phone, and subcontractor costs adding up in the background. The CRA doesn't take your word for any of it: every claim needs a record behind it, and that record needs to survive for six years. The rest of this guide is the specifics, trade by trade expense.

The truck: vehicle and mileage

For most trades, the vehicle is the single largest deductible cost in the business — and the one most often claimed badly. You have two broad paths. If the vehicle is owned by a corporation or you're tracking actual costs, you deduct the business-use share of fuel, insurance, repairs, and capital cost allowance, based on the ratio of business kilometres to total kilometres driven. If you're using a personal vehicle and claiming a per-kilometre allowance instead, the 2026 CRA rate is 73 cents/km for the first 5,000 km driven for business and 67 cents/km for every kilometre after that in the provinces (77 and 71 cents/km respectively in the territories).

Either method lives or dies on one habit: a logbook. Date, destination, purpose, kilometres — logged as you drive, not reconstructed in April from memory. Without it, the business-use percentage you're claiming is a guess, and guesses are exactly what a review targets.

The tools

Tools and equipment bought for the business are deductible, though how you claim them depends on cost and expected life — a tape measure and a laser level don't get treated the same way. Bigger-ticket equipment typically gets depreciated over time rather than expensed all at once, which is exactly the kind of classification call worth having a bookkeeper make consistently rather than re-deciding every purchase.

Work clothing and PPE — the nuance that trips people up

Everyday clothing generally isn't deductible, even when you only ever wear it on a jobsite — that's a matter of what the clothing is, not how you use it. A pair of jeans stays a personal expense whether you wear them to a jobsite or a barbecue. Specialized safety equipment tied to a specific hazard sits in a different category from ordinary workwear. This is one of the murkier corners of trades bookkeeping, and it's exactly where a glovebox full of undifferentiated receipts turns into a slow afternoon sorting personal from business at tax time — better to flag it at time of purchase than reconstruct it later.

Jobsite meals — the 50% ceiling

Food and beverage costs, including the coffee run and the lunch grabbed between jobs, are capped at 50% of the lesser of what you actually spent and what's reasonable for the circumstances. A narrow set of exceptions exist — costs you bill back to a client, up to six staff social events a year, and certain remote-worksite meals — but for the everyday jobsite meal, plan on half deductible, not all of it.

The shop, the garage, the spare room

Plenty of trades run the paperwork side of the business — quoting, invoicing, ordering materials — out of a home office or a workspace attached to the house. If that space is either your principal place of business, or a space used only to earn business income and used regularly and on an ongoing basis to meet clients or customers, you can deduct the business-use share of costs like heat, home insurance, electricity, cleaning supplies, part of your property taxes, mortgage interest, and capital cost allowance. One limit worth knowing before you get excited: this deduction can't create or increase a business loss — it can only offset income you actually have. Anything left over carries forward to next year rather than disappearing.

Phone, data, and subcontractors

A phone that runs the business — client calls, supplier texts, photos of a finished job — is deductible for its business-use portion, the same logic as the vehicle: track how much of the use is business versus personal and claim accordingly, not the whole bill because the business happens to use the phone sometimes.

Subcontractor costs — bringing in another trade or an extra set of hands for a job — are a legitimate business expense too. Keep the paperwork on who you paid and for what; it's the kind of cost that gets attention if your subcontractor spend looks large relative to your reported revenue, and clean records are the whole defence.

The glovebox-receipt problem

Every trade business generates the same pile: fuel receipts, a hardware-store slip, a lunch receipt, all going soft in a glovebox or a jacket pocket. None of that is a bookkeeping problem until April, when it becomes a very large one. The fix isn't willpower — it's a system: photograph receipts the day they happen, log kilometres as you drive, and sort personal from business at the point of purchase instead of at tax time.

Whatever system you land on, the CRA's retention rule doesn't move: keep your records for at least six years, even for anything filed online where you weren't asked to attach documents. "I definitely had a receipt for that" isn't a record.

Where this fits in your books

None of this is complicated in isolation — the difficulty is doing it consistently, month after month, on top of running actual jobs. Our free deduction checklist walks through these categories so nothing falls through at year-end. And if the glovebox has already won, monthly bookkeeping from $200/month, HST filings included, is built for exactly this: someone else turning receipts into records so your accountant's year-end bill isn't padded by hours spent sorting yours.