If you’re running your small business from home, you may be able to make home-based business tax deductions. 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), or your home office must be exclusively used for your business, and used regularly for meetings with clients, customers or patients.
Self-employed individuals can make many deductions, but 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, it’s usually 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 relate to your business directly — things like phone, utilities, internet and cleaning materials — 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. 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.