Cell Phones and CRA
What is CRA's position on cell phones?
Editor: links updated 2019-08
Are cell phones fully deductible?
My client is using 2 cell phone and I am not sure if they are both fully deductible. Is there a rule on this?
If using only one cell phone, is that fully deductible?
CRA's postion on cellular phone use is found at https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/benefits-allowances/provided/cellular-phone-internet-services.html .
I discuss briefly land line phones at T2125 Line 9220
and also when discussing what expenses are not deductible
The key to deductibily when you are a business owner is incurring the expense to earn income
You might want to take at look at the CRA publication Excise and GST/HST News No. 61
from the summer of 2006 - Ordinary location of mobile phones
It discusses that there "are special rules for determining whether a particular call is subject to GST/HST in the situation where a cellular service provider charges a subscriber for calls made on his or her cell phone on a pay-per-use basis."
The CRA publication T4130 Employer's Guide Taxable Benefits and Allowances
discusses cellular phone service.
The Canadian Tax Resource published an article in March 2010 on Deductions From Employment Income
. Salesperson expenses were discussed.
Under expenes permitted as salesperson expenses
, it says, "Supplies used directly in your work. This includes office supplies, cellular phone airtime, and long distance
(your normal monthly charge for cellular or telephone cannot be deducted)."
Jones & O'Connell posted an excellent article in September 2016 entitled Employer-provided cell phones - the potential tax cost
. Updated March 2017 - be sure to read this article
While these references / articles are discussing employees, some of the logic could be applied to the sole proprietor when trying to determine "What is a reasonable expense?"
So, are two cell phones deductible?
I think it would be pretty tough to explain why the business owner needs 2 business cell phones for himself. He can only use one at a time. Any individually charged calls would certainly be deductible if they were related to business and were not personal in nature.
Is one cell phone fully deductible?
Again it depends. Is it used 100% for business with no personal useage? Is the plan a basic one? Does the owner's personal use of the cell phone result in charges over the basic plan?
You can always phone CRA and ask their opinion.P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.