Yes, you can deduct certain expenses incurred before your business officially opens, but not all startup costs qualify. The CRA allows you to claim expenses that directly relate to setting up your business and generating income, provided you can prove a reasonable expectation of profit. Timing matters, though: expenses incurred too far in advance of business launch may be denied, and some startup costs must be capitalized and amortized over time rather than claimed in a single year. Not every penny you spend before opening counts as a deductible business expense. The CRA distinguishes between different types of startup spending: Expenses that typically qualify for deduction: - Market research and feasibility studies directly tied to your business idea - Professional fees (lawyer, accountant, bookkeeper) for setting up your business structure - Licensing, permits, and regulatory compliance costs - Business insurance premiums (once the policy period begins) - Website development and domain registration - Office supplies and materials for business setup - Training or certifications required to operate your business legally Expenses that do NOT qualify: - Personal travel or general research unrelated to a specific business venture - Expenses incurred before you have a concrete plan to start a business
Yes, if the expenses directly relate to setting up your business and you have a reasonable expectation of profit. However, timing matters: expenses incurred years in advance or unrelated to a specific business plan may be denied. Keep detailed records linking each expense to your startup plan.
Not as full deductions. Equipment and furniture are capital assets that must be depreciated over time using Capital Cost Allowance (CCA) rules. You claim a percentage each year based on the asset's class, not the full purchase price in year one.
The CRA uses this test to ensure deductions are for genuine business ventures, not hobbies or personal interests. You must show a concrete business plan, realistic income potential, and reasonable timing for launch (typically within 1-2 years).
Yes, professional fees for incorporating, registering, or setting up your business structure are generally deductible in the year they are incurred, even before launch. Keep invoices showing the work was specifically for business setup.
Pre-opening interest is typically not deductible. Interest becomes deductible once the money is borrowed and deployed to generate business income. Check with the CRA or a tax professional about your specific loan situation.