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Deductions for home-based businesses in Canada

By Samantha Garner | October 19, 2019

home business tax deductions canada

Running a small business from home involves many considerations – but the good news is you may be able to make home-based business tax deductions.

How to make tax deductions for your home-based small business

To qualify, your home must be the principal place of your business – that means more than 50% of your income-producing activities are performed there. That, or your home office must be exclusively used for your business, and used regularly for meetings with clients or customers.

Self-employed business owners, employees, and commissioned sales employees can also make deductions.

To find your business-use-of-home deduction, calculate how much of your home you use for business. If you have a home office, you can usually take the area of your work space and divide it by the total area of your home.

A portion of household expenses that relate to your business directly — like internet, phone, utilities, and cleaning materials — can also be deducted. You may also claim house insurance, property taxes, or rent.

If you operate a part-time business out of your home, expenses must be adjusted accordingly by calculating the hours the work space is used per day, divided by 24 hours. This provides a calculated portion of your total home expenses.

For more information, including what in-the-home expenses you can and cannot deduct, check out CRA’s guidelines for work-space-in-the-home expenses.

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