Calculating home-based business deductions

Did you know that entrepreneurs operating their business from home may be eligible for home-based business tax deductions? To qualify, your home must be either:

  • The principal place of your business (that means over 50% of your income-producing activities are performed there)


  • Your home office must be exclusively for your business and used regularly for meetings with clients, customers or patients.

How to calculate home-based business deductions

The business-use-of-home deduction is found by calculating how much of your home you use for business β€” usually, if you have a home office it’s possible to take the area of your work space and divide it by the total area of your home.

A portion of household expenses that directly relate to your business β€” including utilities, telephone, internet and cleaning materials β€” can also be deducted. House insurance, property taxes, or rent may also be claimed.

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 to get a calculated portion of your total home expenses.

Employees and commissioned sales employees of your home-based business are also able to make tax deductions.

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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