T2125 Line by Line: Every Expense Explained
CRA Form T2125 has 22 expense lines in Part 4. Here is what each one means, what belongs there, and a plain-English example for Canadian sole proprietors.
Quick Answer
T2125 Part 4 has 22 expense lines numbered 8521 through 9945. Each line covers a specific category of deductible business expense. The most commonly missed lines are 9275 (shipping), 8710 (bank charges), and 9224 (non-vehicle fuel). Software subscriptions go on Line 9270 — not Line 8760.
This is a companion to the complete T2125 guide. For context on how T2125 fits into your T1 return, start there.
Line 8521 — Advertising & Promotion
All costs to market your business — paid ads, website hosting, domain names, business cards, flyers, social media ads, and sponsored posts.
NorthOS category: Advertising & Promotion
Line 8523 — Meals & Entertainment
Client meals, business lunches, and networking events. Only 50% of the actual cost is deductible — CRA limits this line intentionally. Keep the receipt and note who you met with and the business purpose.
NorthOS category: Meals & Entertainment
Line 8590 — Bad Debts
Invoices you issued, included in your Line 8000 income, and have now written off as uncollectable. You can only claim bad debts for income you already reported — you cannot claim a bad debt on a job you never invoiced.
NorthOS category: Bad Debts
Line 8690 — Insurance
Business insurance premiums. This includes professional liability (errors & omissions), general commercial liability, and contents insurance for your business equipment. Do not include personal life or health insurance here.
NorthOS category: Insurance
Line 8710 — Interest & Bank Charges
Monthly fees on your business bank account, interest paid on a business loan or business credit card, NSF fees, and wire transfer fees. Keep your bank statements — CRA may ask for these.
NorthOS category: Interest & Bank Charges
Line 8760 — Business Taxes, Fees & Licences
Government-issued licences, permits, and registrations. Also includes professional membership dues required to practice your trade or profession. Do not put software subscriptions here — those go on Line 9270.
NorthOS category: Business Tax, Fees, Licences
Line 8810 — Office Expenses
Small consumable items used in running the administrative side of your business. These are supplies that get used up — not equipment you keep. If it costs more than a few hundred dollars and lasts more than a year, it probably belongs in CCA instead.
NorthOS category: Office Expenses
Line 8811 — Supplies
Materials consumed directly in delivering your product or service. The distinction from Line 8810: supplies are used in your actual work, not just your office. For product sellers, raw materials that go into what you make belong here (or in COGS on Line 8320).
NorthOS category: Supplies & Materials
Line 8860 — Legal, Accounting & Professional Fees
Fees paid to lawyers, accountants, bookkeepers, and other regulated professionals for services related to your business. Your annual tax preparation fee goes here. Do not include fees paid to subcontractors who do billable work — those go on Line 9060 or as COGS.
NorthOS category: Legal, Accounting & Professional Fees
Line 8871 — Management & Administration Fees
Fees paid to a person or company for management or administrative services. CRA scrutinizes this line when payments go to family members or related parties — the amount must be reasonable and reflect actual services provided.
NorthOS category: Management & Admin Fees
Line 8910 — Rent
Rent paid for a separate business location — office, studio, workshop, or retail space. If you work from home, use Line 9945 (Business-Use-of-Home) instead. If you rent both a home office and an external space, only the external space goes here.
NorthOS category: Rent
Line 8960 — Maintenance & Repairs
Cost of maintaining or repairing business equipment, tools, or your business premises. Routine maintenance (oil changes for a work vehicle, equipment servicing) goes here. Major improvements that extend the life of an asset belong in CCA instead.
NorthOS category: Maintenance & Repairs
Line 9060 — Salaries, Wages & Benefits
Gross wages paid to employees on your payroll — people you issue T4 slips to. Also include the employer portion of CPP and EI premiums. Payments to subcontractors who invoice you are not wages — they go on Line 8860 or as COGS subcontracts (Line 8360).
NorthOS category: Salaries, Wages & Benefits
Line 9180 — Property Taxes
Property taxes on a business property you own. If you work from home and own your home, the business-use portion of your property taxes is claimed through Line 9945 (Business-Use-of-Home), not here.
NorthOS category: Property Taxes
Line 9200 — Travel
Travel costs when you travel away from your home base for business — flights, accommodation, ground transportation, and 50% of meals while travelling. Local commuting is not deductible. Keep all receipts and note the business purpose of each trip.
NorthOS category: Travel
Line 9220 — Telephone & Utilities
Business-use portion of your phone and internet. If you use your personal phone for business, calculate the percentage of business use and apply it to your monthly bill. Keep monthly statements. Utilities for a separate business location go here in full; home utilities belong in Line 9945.
NorthOS category: Telephone & Utilities
Line 9224 — Non-Vehicle Fuel
Fuel costs for equipment and machinery that is not a motor vehicle. Gasoline or propane for a generator, compressor, or other business equipment goes here. Vehicle fuel belongs in the motor vehicle expenses calculation on Line 9281.
NorthOS category: Non-Vehicle Fuel
Line 9270 — Other Expenses
A catch-all for legitimate business expenses that do not fit any other line. Software subscriptions and platform/transaction fees are the most common items here. Describe each expense clearly — CRA may ask what is included.
NorthOS category: Software & Subscriptions / Platform Fees / Other Expenses
Line 9275 — Delivery, Freight & Express
Shipping costs you pay to deliver products or business materials. If you sell physical goods, this is one of your most important lines. Keep shipping receipts or export your carrier account history at year end.
NorthOS category: Delivery, Freight & Express
Line 9281 — Motor Vehicle Expenses
The business-use portion of operating your personal vehicle for business. You must keep a mileage log tracking date, destination, purpose, and kilometres for every business trip. Apply your business-use percentage to total annual vehicle costs: gas, insurance, repairs, registration, and lease payments or CCA. Lease payments are capped at $1,100/month (2026); loan interest is capped at $350/month.
NorthOS category: Motor Vehicle Expenses
Line 9936 — Capital Cost Allowance (CCA)
Depreciation on business equipment and assets. You cannot expense equipment in full in the year of purchase — it must be depreciated over time. Common classes: Class 50 (computers/laptops, 55%/yr), Class 8 (furniture/equipment, 20%/yr), Class 12 (small tools under $500, 100%), Class 10 (vehicles, 30%). The half-year rule reduces your first-year claim by 50%.
NorthOS category: Capital Cost Allowance
Line 9945 — Business-Use-of-Home
Deduction for using part of your home as your principal place of business. Calculate your workspace as a percentage of your home's total area, then apply that percentage to eligible home costs: rent or mortgage interest, heat, electricity, home insurance, and property taxes. Your home office deduction cannot create a business loss — unused amounts carry forward to future years.
NorthOS category: Business-use-of-home Expenses
NorthOS maps every expense to the right T2125 line automatically
Every expense you log in NorthOS is categorized to the correct CRA T2125 line. Scan a receipt, confirm the category, and your year-end workpapers sort themselves. No spreadsheet. No guessing which line shipping goes on.
Try NorthOS freeThis guide is for informational purposes only and does not constitute tax advice. CRA rules can change — always verify with the CRA T4002 guide or a qualified tax professional.
Related Reading
- T2125 Form Canada — Complete Guide — How T2125 fits into your T1 return, deadlines, home office, CCA, and common mistakes.
- Freelancer Expense Deductions Canada — Which expenses sole proprietors most commonly miss at tax time.
- When to Register for GST/HST in Canada — The $30,000 threshold explained, including how it interacts with your T2125 income.