If you’re an electrician, plumber, landscaper, HVAC tech, roofer, or general contractor in Canada, you already know one truth:
You work hard for every dollar you earn.
So the last thing you want is to hand more of it to the CRA than necessary.
But year after year, thousands of contractors — especially incorporated trades — unintentionally overpay their taxes simply because they don’t realize what they’re allowed to deduct.
And it’s not because the rules are complicated (though they can be). It’s because contractors are busy. Jobs run late. Receipts get tossed in toolbags. Mileage logs never get updated. And bookkeeping becomes a “when I have time” project.
This blog fixes that. Here’s what contractors commonly miss, and how to avoid paying more tax than you should.
Why Contractors Lose Money at Tax Time
Unlike office-based businesses, trades businesses operate on the road, at job sites, in shops, and out of trucks. That creates one big problem:
Your expenses are everywhere, and CRA wants them organized.
What CRA expects:
You must keep complete and verifiable records (CRA: “Keeping Records”).
You must support each business expense with documentation — not just a bank statement.
Vehicle, tool, and home-office claims must be linked to business use.
So when receipts go missing or personal and business transactions blend together, legitimate deductions get denied — even if you truly paid for them.
That’s why contractors lose money:the expenses are real; the documentation isn’t.
The Write-Offs Contractors Miss Most Often
Instead of long lists, here are the core categories where contractors consistently leave the most money on the table — with short, clear explanations that follow CRA guidance.
1. Tools & Equipment (CCA — Capital Cost Allowance)
CRA does not allow you to deduct the full cost of many tools and machines in one year — they must be depreciated.
Most contractors either:
Forget to claim the depreciation, or
Only claim a portion but miss future years, or
Deduct the full cost incorrectly, risking a reassessment.
Tools often fall under Class 8 (20% CCA) — meaning they should reduce your taxes every year, not just once.
Missing CCA = missed tax savings you’re entitled to claim.2. Vehicle Use — the Biggest Write-Off Contractors Mess Up
This is the #1 area CRA reviews for trades. CRA is clear: no mileage log = no vehicle deduction.
That’s why contractors lose thousands on:
Fuel
Repairs and maintenance
Insurance
Interest or lease costs
Business travel
Worksite trips
CRA doesn’t allow “estimates.” If your log isn’t accurate, CRA can reduce or deny the entire claim — even if the expenses were real.
This is where digital tracking tools instantly increase deductions the right way.3. Job Materials and Supplies
Lumber, fittings, wire, pipes, fasteners, adhesives, gravel, soil, landscaping products…
Essential, but often poorly tracked.
Contractors lose money when:
Receipts from supply stores get lost
Personal cards are used by accident
Materials for multiple jobs get mixed together
Items are purchased in bulk but not recorded properly
4. Safety Gear & PPE
Steel-toe boots, gloves, visibility gear, hard hats — all fully deductible. Yet contractors often don’t bother keeping these receipts because “it’s small stuff.” Across a year? It’s not small.
5. Home Office (Yes, CRA Allows It for Trades)
Even if you work on job sites, you may still qualify for a home office deduction if you:
Store tools or materials,
Do your quoting and admin there,
Use it as your business hub.
CRA allows a proportional claim for:
Internet
Utilities
Property tax
Rent or mortgage interest
Repairs to the office area
6. Subcontractors & Labour Costs
Hiring helpers, subcontractors, or temporary labour? These are deductible costs.
But here’s the catch:
Contractors in construction must issue T5018 statements in many cases.
Miss this and CRA can penalize you or deny deductions.
Most contractors simply don’t know the rule exists.7. Software, Apps & Marketing
Job-site apps, quoting tools, project management platforms, cloud storage, QuickBooks, website hosting, digital ads — all deductible.
These are commonly forgotten because they’re small automatic renewals.Where CRA Actually Cracks Down on Contractors
Based on CRA review trends, these are the most common problem areas:
❌ Vehicle claims without mileage logs
❌ Missing receipts for materials and tools
❌ Undocumented subcontractor payments
❌ HST errors and missed instalments
❌ Home office claims without proper calculation
❌ Cash jobs not recorded properly
Most of the time, CRA issues reassessments not because the business acted improperly — but because the documentation didn’t meet CRA evidence requirements.
What Working With a CPA Fixes Instantly
A good accountant doesn’t just “do taxes.” For contractors, they solve the actual problems:
Proper categorization
Correct CCA schedules
Mileage + vehicle tracking compliance
Clean handling of material costs
Subcontractor T5018 filings
GST/HST done right
Digital receipt systems
Separation of personal vs business expenses
The result?
Lower taxes.
Lower CRA risk.
Lower stress.
How Bhundhoo Tax Helps Canadian Contractors
We work with trades across Ontario and Canada — including electricians, plumbers, landscapers, HVAC techs, roofers, and handymen.
Our CPA-led system gives you:
Digital bookkeeping (properly categorized)
HST filing & tracking
CCA schedules for tools and equipment
T2 corporate taxes
Payroll and subcontractor compliance
Cash flow advisory
Receipt management
Audit-ready documentation
Final Thoughts: Your Tools Earn Money — Your Deductions Should Too
Most contractors aren’t missing deductions because they don’t spend money. They’re missing them because the expenses aren’t tracked, categorized, or supported the way CRA requires.
Fixing that can save hundreds — sometimes thousands — every year.
👉 Book a Contractor Tax Strategy CallWe’ll review your expenses, strengthen your system, and build an audit-ready structure that protects your income.