Can I deduct my home office expenses through my corporation?
Yes, but only if the home office qualifies under Income Tax Act s. 18(12): it must be either the principal place of business or used exclusively to earn business income and regularly used to meet clients. The mechanism is a reimbursement paid by the corporation to you as shareholder-employee under an accountable plan, supported by a T2200 signed by the corporation.
Two acceptable structures. Structure A – reimbursement: the corporation pays you back a prorated share of home expenses (utilities, internet, insurance, minor repairs) based on the office’s square footage vs total home. Corp deducts the reimbursement, you receive it tax-free, no s. 15(1) benefit. Structure B – shareholder-employee deduction: you deduct employment-use-of-home expenses on your T1 personally, capped at employment income from the corporation, supported by a T2200 issued by the corp.
Example: an Ontario consultant’s home office is 15% of the total home area. Annual home costs (utilities, internet, insurance, minor repairs) total $12,000. Deductible share is $1,800. The corporation reimburses $1,800; the corp deducts $1,800; the owner receives $1,800 tax-free. No T4 impact.
Do not include: principal residence mortgage interest, property tax, capital improvements. These would jeopardize the principal-residence exemption on later sale and are excluded by s. 18(12). CCA on the home is also a bad idea (loses PRE).
Note: If the office is a client-meeting space it must be used regularly for that purpose. Occasional Zoom calls do not meet ‘regularly’; you need documented meeting frequency to withstand audit.
Source: canada.ca â Home office expenses for employees
— Bader A. Chowdry, CPA, CA, LPA — Insight Accounting CPA
Disclaimer: Bader A. Chowdry, CPA, CA, LPA is a Licensed Public Accountant regulated by CPA Ontario. Insight Accounting CPA Professional Corporation is a Chartered Professional Accountant firm. This content is general information only and does not constitute professional advice for your specific facts. Confirm current rules and figures with your own advisor before acting.