The permissions and memberships a business needs in order to operate cost money every year, and you can deduct them. On Form T2125, they go on line 8760, Business taxes, licences, and memberships.
What belongs here
You can deduct all annual licence fees and some business taxes you incur to run your business.
Licence fees, for example:
- beverage licences
- business charges
- trade licences
- motor vehicle licences and registration permits
Business taxes that may be deductible, for example:
- municipal taxes
- land transfer taxes
- gross receipt tax
- health and education tax
- hospital tax
You can also deduct annual dues or fees to keep your membership in a trade or commercial association, and subscriptions to publications.
What does not belong here
Club dues. You cannot deduct club membership dues, including initiation fees, if the main purpose of the club is dining, recreation, or sporting activities. There is no other line for them: they aren't deductible.
Your income tax. Federal or provincial income tax is never a business expense, so it stays off the form entirely. The business taxes listed above are a different thing.
Property taxes on your business premises. Those go on line 9180, property taxes.
What to keep
Keep a record of all your income and expenses, with the documents behind them. Licence renewals, tax notices, and association dues usually arrive as a notice or a receipt showing who charged it, the date, and what the charge was for. Keep the notice itself rather than only the payment, since the notice is what names the licence or the tax.
Don't send them in with your return. Keep them in case the Canada Revenue Agency (CRA) asks to see them. 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.