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Expense Tracking Guide

Owner: Mahdi Moradi Status: Draft Version: 1.0.0 Last Updated: 2026-03-17 Applies To: Company

1. Overview​

This guide defines every deductible expense category, how to record it, and what proof CRA requires. Use this alongside the 2026 Expense Log and the CRA Compliance Guide.

2. T2125 Expense Line Mapping​

Every expense falls into a specific T2125 line. Here's the mapping:

T2125 LineCategoryYour Expenses
Line 8521AdvertisingFacebook, TikTok, Google ads
Line 8590Bad debts(unlikely in 2026)
Line 8690InsuranceBusiness portion of home insurance
Line 8710Interest (mortgage)Business portion of mortgage interest
Line 8760Business taxesBusiness portion of property tax
Line 8810Office expensesSoftware, supplies, printer ink
Line 8811Office stationery/suppliesLabels, packaging materials
Line 8860Professional feesAccountant, legal (if any)
Line 8871Management/admin fees(if applicable)
Line 8910Rent(N/A — you own your home)
Line 8960Salaries/wagesWife + kids wages
Line 9060CCA (depreciation)Equipment
Line 9180Telephone/utilitiesPhone + internet (business %)
Line 9200Other expensesDomains, hosting, courses, travel
Line 9281Motor vehicle expensesBusiness portion of fuel, parking
Line 9945Business-use-of-homeCalculated home office expenses

3. Expense Recording Rules​

What Constitutes a Valid Receipt​

For CRA, a valid receipt must show:

  • Date of purchase
  • Vendor name
  • Amount paid
  • Description of goods/services
  • Payment method

When You Don't Have a Receipt​

CRA accepts alternatives for small amounts:

  • Bank or credit card statement showing the charge
  • PayPal/Stripe transaction record
  • Email confirmation
  • Written explanation: "Expense of $X incurred on [date] for [purpose]. Receipt unavailable."

Digital vs Physical​

  • Digital receipts are fully accepted by CRA
  • Save as PDF or screenshot
  • Organize in the folder structure from the CRA Compliance Guide
  • Back up to cloud storage

4. Category-by-Category Guide​

4.1 Advertising ($1,000–$3,000)​

PlatformHow to TrackReceipt Source
Facebook AdsExport monthly billing from Ad ManagerFacebook Ads Manager → Billing
TikTok AdsExport monthly billingTikTok Ads Manager → Payment
Google AdsExport monthly billingGoogle Ads → Billing & payments
Influencer feesSave invoices/payment confirmationsE-transfer + agreement

Deduction: 100% deductible Frequency: Record monthly

4.2 Wages — Wife ($5,200–$15,600)​

ItemRequired
TimesheetWeekly or monthly with date, hours, tasks
Signed receiptFor each payment (template in CRA docs)
E-transfer proofScreenshot showing date, amount, recipient
Rate justification$20–$30/hour is reasonable for design/admin in Canada

Deduction: 100% deductible Her tax: She reports this as income on her T1. Below ~$15,000, minimal or no tax.

4.3 Wages — Kids ($1,000–$2,000)​

ItemRequired
TimesheetDate, hours, specific tasks
Signed receiptParent signs on behalf (template in CRA docs)
Rate justification$12–$15/hour is at or near minimum wage

Deduction: 100% deductible Their tax: $0 (below basic personal amount)

4.4 Equipment (CCA)​

ItemReceiptCCA ClassRateHalf-Year Rule Applies
LaptopYesClass 5055%Yes
PhoneYesClass 5055%Yes
MonitorYesClass 5055%Yes
CameraYesClass 820%Yes
Ring lightYesClass 820%Yes
Label printerYesClass 5055%Yes
Office chairYesClass 820%Yes
DeskYesClass 820%Yes

Note: Items under $500 can sometimes be expensed immediately. Items over $500 must be capitalized and depreciated via CCA.

4.5 Home Office​

Calculate once per year:

Office area: _____ sq ft
Total home area: _____ sq ft
Business use percentage: _____ %

Apply this % to:
- Mortgage interest: $_____ × ___% = $_____
- Utilities: $_____ × ___% = $_____
- Internet: $_____ × ___% = $_____  (can use higher % if justified)
- Property tax: $_____ × ___% = $_____
- Home insurance: $_____ × ___% = $_____
- Repairs (common areas): $_____ × ___% = $_____

Total home office deduction: $_____

Required Proof:

  • Mortgage statement showing interest paid
  • Utility bills (or annual summary)
  • Internet bills
  • Property tax notice
  • Insurance policy/bill
  • Measurement of office space vs total home

4.6 Software & Subscriptions​

ToolHow to Get Receipt
ShopifySettings → Billing → Download invoice
ChatGPTAccount → Billing → Download receipt
GitHubSettings → Billing → Download invoice
CanvaAccount → Billing → Download receipt
AdobeAccount → Plans & billing → Download invoice
AzureAzure Portal → Cost Management → Invoices
Domain regsRegistrar dashboard → Invoices

Deduction: 100% deductible Frequency: Record monthly or as charged

4.7 Travel & Vehicle​

Keep a mileage log:

Date:       2026-XX-XX
From:       [Home / Office]
To:         [Destination]
Purpose:    [Supplier meeting / Client visit / Product sourcing]
KM:         [X] km
Fuel cost:  $[X] (or calculate from mileage rate)
Parking:    $[X]

CRA Mileage Rate (simplified): You can use actual costs (fuel + maintenance × business %) or the CRA per-km rate (~$0.70/km for first 5,000 km, ~$0.64 after).

4.8 Meals & Entertainment​

50% deductible only. Must have clear business purpose.

Date:       2026-XX-XX
Location:   [Restaurant]
Amount:     $[X]
Deductible: $[X × 50%]
Attendees:  Mahdi Moradi, Narjes [Wife] (business partner)
Purpose:    Q2 Shopify strategy review and product selection meeting
ExpenseReceipt TypeDeductionNotes
IngredientsGrocery receipt100%Mark business items on receipt
PackagingStore/online100%Boxes, labels, tissue
ShippingCanada Post/courier100%Keep tracking numbers
Food permitMunicipal receipt100%Keep certificate
Kitchen suppliesStore receipt100% or CCADepends on value

5. Tracking Spreadsheet Columns​

Your Excel log should have these columns at minimum:

ColumnDescription
DateDate of expense
Category(from categories above)
DescriptionWhat was purchased/paid
AmountTotal amount
Deductible AmtAmount you can deduct (some are partial like meals)
T2125 LineWhich T2125 line it maps to
Receipt?Yes/No — do you have the receipt?
Payment MethodCash / E-transfer / Credit card / PayPal
NotesAny additional context