Home office expenses are the portion of household costs, rent, utilities, internet, and maintenance, that an incorporated business owner can deduct when a home workspace is the principal place of business or used exclusively to earn business income.
For incorporated business owners, the mechanism differs from the T2200 employment deduction used by employees. The corporation can pay rent to the owner for the use of home office space, creating a deductible expense for the corporation and rental income for the owner, offset by the home office expenses claimed personally. The arrangement must reflect a fair market value rental rate and be supported by a written agreement to withstand CRA review.
The deduction is legitimate and available. The risk lies in claiming more than is defensible: overstating the space percentage, mixing personal and business expenses, or charging rates above what a third party would pay. The CRA audits home office claims regularly, and the documentation standard is higher than most owners expect.
See also: Arm’s Length Transaction · T2 Corporate Tax Return · Owner Compensation PlanningHome office deductions are legitimate but require the right structure to be defensible. See how Wefinx approaches tax planning.