If you own your own business and use your home as your primary workplace, you may be eligible to deduct certain business expenses from your income tax.
Which home-based businesses are eligible?
- Your home is your principal place of business.
You do your work at your home, you meet clients or patients at your home, or manufacture a product at your home. If you have another business space, you’re likely not eligible for these tax deductions.
- You use a workspace in your home solely to earn your business income and use it regularly to meet with clients, customers, or patients.
Examples of this would be a home accounting practice or salon.
How much can I claim?
If you meet the Canada Revenue Agency’s (CRA) eligibility requirements, you can claim a portion of your home expenses.
Suppose your home workspace serves personal purposes sometimes (e.g. home office Monday-Friday, personal use Saturday-Sunday). In that case, you should also calculate the percentage of business use and apply it to the calculation above.
Which home expenses can I include?
You can deduct the percentage calculated above of all your home expenses related to operating your business.
- Cleaning materials
- Internet connections
- Home insurance
- Mortgage interest
Other business-related deductions
- Office/business furniture (chairs, desk, filing cabinets, and other specialty equipment)
- Computers and software– for business use only
- Office supplies (paper, postage, ink cartridges, etc.)
- Vehicle expenses – if you use your car for business purposes like traveling to meet clients or to attend training
- Meals and entertainment – 50% of business-related expenses
- Accounting, legal and other professional Fees
- Business insurance
- Interest on loans
- Trade shows and business conventions
- Charitable donations
Managing your home-based business’ finances and taxes can be challenging, and it’s vital to keep excellent records and all receipts.
We can help with tools that help you keep track of your expenses so you can maximize the tax benefits for your small business: Learn more.