Can I deduct my phone and internet bill as a freelancer in Canada?

Phone and internet are among the most common freelancer deductions, and also among the most commonly overstated. The CRA's rule is proportional: claim what the business used, and leave the personal share alone.

How does the CRA treat a cellphone used for both business and personal calls?

You may deduct the percentage of airtime expenses for a cellular telephone that reasonably relates to earning your self-employment income. The same applies if you lease the phone: deduct the percentage of the lease costs that reasonably relates to your business income.

In practice, that means estimating a business-use percentage and applying it to the bill. If roughly 60% of your calls, texts, and data are for client work, you claim 60% of the cost. There is no CRA-mandated percentage — the test is whether the split is reasonable. The cleaner your documentation, the easier the number is to defend: a quick review of a few months of call logs or data usage, or a written note explaining your estimate, goes a long way. Claim 100% of a phone you clearly also use personally, and you are inviting the expense to be reduced or denied on review.

What about home internet and a home phone line?

The CRA allows deductions for telephone, cellphone, and utilities (such as gas, oil, electricity, water, and cable) when the expenses were incurred to earn income. For most home-based freelancers, the household bills fall into two buckets:

• A phone or line used exclusively for business — for example, a second line or a dedicated mobile plan — can generally be claimed in full as a direct business expense.
• Shared household bills, including home internet and a family phone plan, must be split. Claim only the business-use portion, the same way you would split any mixed-use expense. If you are also claiming business-use-of-home expenses, the home-related share of utilities is handled there rather than claimed twice — expenses claimed as business-use-of-home cannot be claimed anywhere else on your return.

Can you deduct the cost of the phone itself?

No — not as an outright expense. If you buy a computer, cellular telephone, fax machine, or similar equipment, you cannot deduct the purchase cost in the year of purchase. Instead, you may deduct the portion of capital cost allowance (CCA) and any interest paid on money borrowed to buy the equipment, to the extent it reasonably relates to earning your business income. CCA spreads the deduction over several years. (If you lease the phone rather than buying it, the business-use percentage of the lease payments is deductible directly, as described above.)

How do you document the business-use percentage?

The CRA does not prescribe a specific method, but the principle running through its guidance is that only the business part of an expense belongs on your return. Practical steps that keep you audit-ready:

• Pick a defensible percentage and write down how you arrived at it — for example, a review of three months of bills or a time-based estimate of work versus personal use.
• Apply it consistently across the year, and revisit it if your work patterns change.
• Keep the bills. Itemised statements support your claim; a single annual total with no paperwork behind it does not.
• Do not double-claim. If part of your phone or internet cost is inside your business-use-of-home calculation, it cannot also be claimed as a separate telephone expense.

Remember the hard ceiling on home-office deductions generally: business-use-of-home expenses cannot exceed your net business income before those expenses, so they cannot be used to create or increase a business loss. Any unused amount can be carried forward to a future year.