Insuring the things your business runs on is a business cost. On Form T2125, it goes on line 8690, Insurance.
What belongs here
Commercial insurance premiums you pay for insurance on:
- any buildings you use in your business
- machinery and equipment you use in your business
What does not belong here
Three kinds of premium look like they belong here and don't.
Insurance on your motor vehicle. Those costs have to be claimed as motor vehicle expenses on line 9281, along with the rest of what the vehicle costs you.
Insurance on a workspace in your home. That part has to be claimed as business-use-of-home expenses, in the home-office part of the form.
Life insurance premiums. In most cases you cannot deduct them. If you use your life insurance policy as collateral for a loan related to your business, you may be able to deduct a limited part of the premiums you paid; the CRA's Interpretation Bulletin IT-309 sets out the conditions.
What to keep
Keep a record of all your income and expenses, with the documents behind them. For this line, keep the policy or the insurer's statement, not just the monthly withdrawal — it is the policy that shows what was insured, which is what puts the premium on this line rather than on the vehicle or home-office one.
Don't send it in with your return. Keep it in case the Canada Revenue Agency (CRA) asks to see it. Business records follow the same six-year retention rule as your personal documents.
Official CRA sources
Source: Canada Revenue Agency (canada.ca). Not tax advice.