Phone and Internet Expenses

by Karen B
(Brampton, ON)

Only the business portion of your personal accounts is deductible.

Only the business portion of your personal accounts is deductible.

Split phone line and internet expenses for home office


I am a sole owner who works from home and am set up with a single phone line with two numbers (one personal and one work), as well as internet charges.

From what I have read, these are not deductible under home office expenses, yet I use the second phone number exclusively for work and I use the internet primarily for work.

These bills, however, are in my personal name. Normally, when I have business expenses incurred out-of-pocket, I charge them back to the business (i.e. office supplies, etc.)

Can I do the same with my phone/internet expenses that apply to the business?

Many thanks for your help!



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Hello Karen,

The good news is ... yes you can!

Your business line is claimed on line 9220 of tax schedule T2125 ... but your personal line is not tax deductible.

You can deduct a portion of your internet connection as well. You will need to find a reasonable method of estimating the personal portion to back out ... as it is not tax deductible. I would claim the business portion for your internet expenses on line 9220 as well ... or line 9270.

The general rule for claiming business expenses is ... it must be reasonable and made with the expectation of profit. All business expenses must be supported by original source documents.

As far as I know, it is okay that they are in your personal name ... because you are a sole proprietor and you are your business.

I do recommend that you limit purchasing business expenses with your personal funds. Learn why in my article on How to Create an Audit Trail.

You may also like to read my Home Business Taxes series found under "The Tax" button on the left hand side of the site.

I wish you much success in your business. :0)

Comments for Phone and Internet Expenses

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Jul 28, 2010
 Many Thanks!
by: Karen B

Hello Laura,

Thank you so very much for your quick response! Your advice is so helpful and I found myself reading quite a few other categories also.

To say I am impressed would be an understatement. I am definitely going to tweet about you on Twitter and share your info on Facebook as well.

Keep up the great work!

Kind regards,
Karen
Jul 28, 2010
 My "bloglets" are on Facebook
by: Bookkeeping Essentials

Hi Karen,

Thanks so much. I'm delighted you like my sight ... and that you want others to know about it too! ;0)

I've just taken the time ... it was on my to do list ... You can find me on Facebook under "Pages" as Bookkeeping-Essentials.com.
Apr 13, 2011
 But what about ITCs?
by: Christian

Hi there,

Thanks for this information with regards to telephone and internet (and all the other useful info in this site!). This is what I expected.

Now my question is related to the ITCs associated with these costs. For example, if I have business use of 68.9% of my $100 (inclusive of tax) internet bill, would I, in Ontario, claim 13/113 of the $68.9, ie $7.93 as ITC?

Also, what do you think about the following "formula" to establish business use: 5 weekdays of 8 hrs business use, 2 hrs private use, 2 weekend days of 4 hrs private use= 40 hrs business vs 18 hrs private = 68.9% business use?

Thanks so much for any help.

Christian



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Hi Christian,

Yes you can claim ITCs related to business use.

With regards your business use calculation ... as long as it passess the "reasonable" test and you feel you could defend it to a CRA auditor ... and you document how you arrived at your percentage, it should be okay.





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.
Sep 01, 2015
 Phone and Internet Expenses
by: Alina

Nice post. I was checking constantly this blog and I'm impressed! Very useful information specially the last part :) I care for such information much. I was seeking this particular information for a very long time. Thank you and best of luck.
Oct 13, 2016
 Salaried Employee work at home
by: Anonymous

What if you are an employee working at home, and required to have the internet to do your work? Is this tax deductible?
Oct 13, 2016
 Salaried Employee work at home
by: Lake

Assuming you are in Canada, if it is required for your job and your home office is your main office - not an additional office - then you can claim it on tax form T77 when you file your personal tax return.

However, in order for you to file this form, you must have your employer complete a Form 2200.

Lern more here:

http://www.cra-arc.gc.ca/E/pub/tg/t4044/README.html
Apr 02, 2017
 Internet being part of a bundle
by: Kac

Hi, I know I can claim my internet for work at home space as I have a T2200 which states it. I know how to fill it out. What I am wondering is my internet is part of a bundle with home phone and TV. The bill does not have a breakdown of it. Also I am using it for personal use too obviously. How much do I claim and do I split it as in a third of the cost and then half as I do use it personally too.
Apr 05, 2017
 Kac
by: Lake

The T2200 must be completed and signed by your employer NOT the employee. The T2200 form gives the employee authorization to complete form T777 Statement of Employment Expenses when preparing your personal income tax return.

Check out the chat on CRA's position on cell phones here:

https://www.bookkeeping-essentials.com/cell-phones-and-cra.html
Apr 05, 2017
 Internet expense
by: kac

Hi Lake,

I know the employer needs to fill out the T2200 which they have. And I know I have to fill out T777 which I have for all the other expenses. What I am wondering about is my internet is part of my bundle, which includes my phone and TV. How to I break it down or do I have to break it down to be able to claim my internet.
Apr 11, 2017
 Kac
by: Lake

I don't know what to say. Every bill I have ever seen has a breakdown of the charges. If you bill doesn't have a breakdown, phone the company and ask for a breakdown of your bill for accounting purposes.
Apr 14, 2017
 Internet Not Deductible
by: Anonymous

We have received a notice from CRA for TY 2014 and 2015 and the letter states (re deductions for home office required by employer) that for internet: "there is no provision under the Income Tax Act to allow this expense. This expense is considered personal in nature."

Given part of the job is maintaining website content and communicating with suppliers and customers by email, that is ridiculous.
Jun 03, 2017
 Internet Not Deductible
by: Lake

Internet is not a home office expense. It is a business expense claimed on line 9220. If you don't have a dedicated business line for the internet, you will have to come up with a way to back out your personal use portion.

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