Self-Employed in Alberta: What You Can Deduct (T2125)

If you're self-employed, business income and expenses are reported on Form T2125 as part of your personal return. The general rule for a deduction is that the expense was incurred to earn business income — but how that applies varies a lot by expense type.

Commonly deductible (with conditions):

• A portion of home expenses, if you have a dedicated home office used regularly for business.
• Vehicle expenses, based on the proportion of business use — a mileage log matters here.
• Business-related software, subscriptions, and professional fees.
• Supplies and materials used directly in the business.

Usually not deductible, or only partly:

• Meals and entertainment — typically only 50% deductible, and only if business-related.
• Personal portions of anything used for both business and personal purposes.

The line between 'deductible' and 'not quite' is where a lot of self-employed filers either miss legitimate deductions or claim ones that don't hold up. See Corporate & Personal Tax for how we review this.