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I am self-employed and I am proficient at repairing vehicles. I use my vehicle exclusively for work: my customers ask me to drive to one of their customer's location and I provide a service on site. I charge my customers for the work and the transit costs are factored into the amount that I charge.

I already deduct all of my travel-related expenses for which I have a receipt, including gas, license, insurance, parts and labor, since the vehicle is not for personal use.

Can I get a quote for labor from a local shop, do the work myself and deduct some or all of the amount of the quote from my revenue in any way?

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    Do you use mileage as a business expense?
    – Hart CO
    Commented Dec 5, 2017 at 0:00
  • Yes, forgot to mention it. I drive to the customer's location and I provide service on site. Transit costs are factored into the price the customer pays, but 100% of the car is used for work. I already deduct all of my expenses for which I have a receipt (gas, insurance, registration, parts, labor and such) but since I end up doing the repair, I wanted to know if it makes sense to deduct the labor as an expense.
    – user65384
    Commented Dec 5, 2017 at 0:03
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    In the US, labor done yourself is not an expense, I assume it's the same up north, but someone else will weigh in.
    – Hart CO
    Commented Dec 5, 2017 at 1:12

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No, you cannot deduct the cost of your own labor. See CRA reference.

This is true in the US as well.

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Step 1 for pretty much any "can I deduct this" question is "Do you pay income tax on it?" You can't deduct something from your income unless it was part of your income to begin with.

Suppose you get paid $60k to drive to people's house, and you do work on your car that would have cost $1k to pay a mechanic to do. So you're receiving $60k in cash, and you're also receiving $1k worth of repair work to your car. Do you claim an income of $61k? If the answer is "no" to that question, then the answer is "no" to your question.

To make it even more clear, imagine that instead of driving to people's houses, you spent all your time building cabinets, and you ended up selling the cabinets for a total of $60k. Can you say "Well, if I had paid someone to build cabinets for me, it would have cost me $60k, so I have an expense of $60k worth of time that I'm going to deduct from my income"? Of course not. Spending time doing things for your business that increase the amount of value that you can offer to your customers is the definition of "work". You're exchanging your time for money, and when you do that, you have to pay income tax.

If you had spent $1k hiring a mechanic to do the work for you, then you would have had $59k of net income. By doing the work yourself, you're increasing your total income, so you have to pay taxes on that. It doesn't do any good to say "Well, it cost me $1k worth of labor, so it's a wash". Again, exchanging your labor for the market rate of that labor is what work is. Everyone who received an income of X exchanged X worth of labor for X dollars, and yet they still have to pay tax on that, just as a store that exchanges X worth of inventory for X dollars has to pay sales tax, even though it's a "wash".

If you really want to, you could probably have your business pay you $1k, claim the $1k as personal income (and pay taxes on it), and have your business claim the $1k as an expense. But barring rare circumstances, that's not going to accomplish anything other than more paperwork and possibly increasing the probability of an audit. There are lots of different ways of doing the accounting, but they all end up with an income of $60k.

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