If your business paid for a new website, a redesign, hosting or online marketing, most of that money can reduce your taxable income. The question is not whether you can claim it, but how. Some costs come off your income in full this year, and others are spread over several years through capital cost allowance (CCA).
This guide, updated for 2026 and checked against current Canada Revenue Agency (CRA) guidance, explains which website expenses are which, the CCA classes the CRA points to, and what to keep for your records. It is general information, so confirm your own situation with your accountant.
Is website design tax deductible in Canada?
Yes. A website you use to earn business income is a business expense. The CRA says there are no specific rules in the Income Tax Act for website development costs, and that whether a cost is a current expense or a capital cost is always a question of fact.
- Current expenses Costs that keep things running, such as hosting, domain renewals, maintenance and advertising, are usually deducted in full in the year you pay them.
- Capital costs Costs that create something lasting, such as a new custom website or online store, are usually claimed over several years through CCA.
Current expenses vs capital costs
The CRA’s usual test is whether the spending gives you a lasting benefit. A cost that comes back every month or year is normally current. A cost that builds an asset you will use for years is normally capital. Income Tax Folio S3-F4-C1 sets out the factors in more detail.
| Website cost | Usually treated as | Why |
|---|---|---|
| Hosting, monthly or yearly | Current expense | Recurs every period |
| Domain name registration and renewal | Current expense | A yearly fee |
| Maintenance plans, updates and small fixes | Current expense | Keeps the site as it is |
| Plugin, theme and software subscriptions | Current expense | Renewed every year |
| SEO, Google Ads and social media ads | Current expense | Advertising for the period |
| A new custom website or online store | Often capital | Creates a lasting asset |
| A large redesign that adds new features | Often capital | Improves the asset |
| Custom web app or client portal | Capital | Software with a life of several years |
This is one reason our quotes list the website build, hosting, the domain and plugin licences on separate lines. Your accountant can see straight away which part is capital and which parts recur every year.
Which CCA class does a website go in?
When a website cost is capital, the CRA says it may be computer software, which goes in Class 12(o), or general-purpose data processing equipment, which goes in Class 10(f). Computer hardware and the systems software that runs it go in Class 50. The rates below come from the CRA’s classes of depreciable property.
| Class | Rate | What it covers for a website |
|---|---|---|
| Class 12(o) | 100% | Computer software that is not systems software. This is where a capital website or web app usually goes. The half-year rule applies, so the first-year claim is usually limited. |
| Class 10(f) | 30% | General-purpose electronic data processing equipment, which the CRA names as the other possible class for a capital website cost. |
| Class 50 | 55% | Computers, servers and the systems software for them, acquired after March 18, 2007. Not the website itself. |
| Class 14.1 | 5% | Goodwill and some intangible property. Some accountants use it for a domain name bought outright from another owner, which is different from a yearly registration. |
A correction to older advice
Earlier versions of this article, like many online, said a website goes in Class 50 at 55%. The CRA’s own guidance points to Class 12(o) for website software, or Class 10(f). Class 50 is for computer hardware and systems software.
Website expenses you can usually deduct
- Website design and development Payments to a designer, developer or agency for a new site or redesign, either in full or through CCA as above.
- Hosting and domains Hosting fees and yearly domain registration and renewal.
- Online store setup Payment gateway setup, product uploads and shopping cart work, current or capital depending on the size of the job.
- SEO and online advertising SEO services, Google Ads, social media ads and content marketing. Self-employed people report advertising on line 8521 of form T2125, and the CRA notes that ads on foreign websites are allowed.
- Software and plugins Subscriptions for website builders, premium plugins, security tools and analytics.
- Maintenance and support Maintenance plans, updates, backups and bug fixes.
- Accounting and legal advice Fees for professional help with your return, on line 8860 of form T2125.
Corporations report the same kinds of costs on their T2 return instead of form T2125. If your business is registered for GST/HST, you can usually also claim input tax credits for the GST/HST you paid on these purchases.
How to claim website expenses on your taxes
- Keep every invoice and receipt Keep invoices from your web designer, receipts for hosting, domains and software, and the bank or card statements that show you paid. The CRA generally asks you to keep records for six years from the end of the tax year they relate to.
- Split current and capital costs Go through the year’s website spending with your accountant and decide which costs are current and which are capital.
- Claim current expenses on the right lines Advertising goes on line 8521, professional fees on line 8860, and other website costs on the line your accountant chooses, often line 9270, other expenses.
- Claim CCA on capital costs Add capital website costs to the right class, usually Class 12, and claim CCA for the year. You can claim less than the maximum if that suits your tax planning.
- Claim the GST/HST back If you are a GST/HST registrant, claim input tax credits on your GST/HST return for the tax on your website purchases.
Plan the timing
If you are planning a website near the end of your fiscal year, ask your accountant whether it makes a difference to pay or launch before or after the year end.
Questions about website expenses and taxes
It can be. The CRA says whether a website development cost is current or capital is a question of fact. A new custom website you will use for years is often capital, while hosting, maintenance and small updates are usually current expenses.
The CRA says a capital website cost may be computer software in Class 12(o), at 100%, or general-purpose data processing equipment in Class 10(f), at 30%. Class 50 is for computer hardware and systems software, not the website itself.
Yes. Hosting and yearly domain registration are usually current expenses, deducted in full in the year you pay them.
Yes. Online advertising and SEO services are usually current expenses. Self-employed people report advertising on line 8521 of form T2125.
If your business is registered for GST/HST and uses the website in its commercial activities, you can usually claim the tax back as input tax credits on your GST/HST return.
Planning a website this year?
Get a written quote you can plan your budget around
A clear, itemized quote makes it easier to plan your spending and to talk to your accountant about what you can claim. Tell us what you need and we will send a written quote and a home page mockup within one business day.
Sources
- Canada Revenue Agency, E-commerce, website development costs
- Canada Revenue Agency, Classes of depreciable property
- Canada Revenue Agency, Income Tax Folio S3-F4-C1, General Discussion of Capital Cost Allowance
- Canada Revenue Agency, Guide T4002, Business expenses and form T2125 lines
- Canada Revenue Agency, Input tax credits for GST/HST registrants
- Canada Revenue Agency, How long to keep your records
This article is general information based on CRA guidance available in October 2026. It is not tax advice. WebCrafters is a web design company, not an accounting firm, so please confirm how to treat your expenses with a qualified accountant.
