Can I Claim a Business Expense I Paid for With My Personal Credit Card?

In most cases, yes. CRA cares whether the expense was for the business and whether you can prove it, not which card paid for it. What changes is the bookkeeping, because the books have to show that your own money covered the cost.

The card doesn't decide whether it's deductible

An expense is deductible when it was incurred to earn business income and the amount is reasonable. Our post on what counts as a business expense covers that test. Paying with a personal card doesn't disqualify an expense that passes it.

You still need proof. The receipt matters as much as it always does, and a card statement alone isn't enough. If the receipt is missing, see can I claim an expense if I lost the receipt?

Sole proprietors: same person, different pockets

A sole proprietorship isn't a separate legal entity from you. When you pay a business expense personally, the books generally record it as an owner's contribution rather than money leaving the business bank account. The expense still belongs to the business. An owner's contribution is value you put into the business that isn't income and isn't a loan.

You don't have to deposit cash into the business bank account for this to apply. When you pay the supplier directly from your own pocket, the business still received the benefit, so the books need to record that you covered it.

If it isn't recorded, one of two things usually happens. The expense is missing from the books, or the books show money leaving the business that never came from it.

Corporations: the corporation owes you

A corporation is a separate legal entity. If you pay a corporate expense personally, the corporation generally owes you reimbursement. The amount can be recorded through a shareholder loan account, the running record of money moving between you and your corporation in either direction, or through another appropriate reimbursement payable account, a liability account that shows the corporation owes you money. Either way, the books need to show that the corporation owes you money, not that the payment came from its bank account.

When the corporation reimburses you for legitimate corporate expenses, supported by receipts, that's generally repayment of an amount it owes you, not employment income or a dividend. Without that support, CRA can treat the payment as something else, such as a payment to you personally, which brings different tax rules.

If you use a shareholder loan account, remember that it can run either way. The one-year rules in our post on shareholder loan rules are about amounts a shareholder owes the corporation, and they come with their own conditions and exceptions. Paying corporate costs personally puts the balance in your favour, but later withdrawals can reverse it, so keep track.

What about GST/HST?

A GST/HST-registered corporation can claim an input tax credit (ITC), the recovery of GST/HST paid on business purchases, when the paperwork meets CRA's requirements. For purchases of $500 or more, that includes the buyer's name, so a receipt in your personal name when the corporation is the real buyer can cause friction. Ask suppliers to invoice the business name going forward. Special rules can also apply to expenses reimbursed to employees or shareholders, so have your accountant look at how yours are handled.

Where people go wrong

• Not recording it at all. The expense and any ITC disappear, and the books don't tie to the card.
• Claiming the whole receipt when it mixes personal and business items. Only the business part is deductible.
• Reimbursing yourself without receipts, or in one lump sum labelled "expenses".
• Losing track of the shareholder loan balance after several rounds of paying and reimbursing.
• Using the personal card for business for months and sorting out the statements at year-end.

Where each of these gets recorded depends on your software. Tell Margot (bottom right of this page, free to try, no sign-up) whether you use QuickBooks Online, Xero or another program, describe what you paid for and how, and she'll walk you through where it goes. The RSB Guide covers the bigger picture of recording expenses and owner money, and the Guided plan's dashboard adds a monthly close checklist that keeps it from piling up.

FAQ

Does paying with a personal card make the expense personal? No. What matters is whether the expense was for the business, not which card paid for it.

Do I need a separate business credit card? CRA doesn't require one. Many owners use one because it keeps the records cleaner.

Is the interest on my personal card deductible? Interest is a separate question with its own conditions. Check with your accountant before claiming it.

How should my corporation repay me? Reimbursing against receipts for real corporate expenses is the usual route. The right timing and method depend on your situation.

Same expense, same receipt. Just make sure the books show who paid.