Confused about self-employment
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Thread: Confused about self-employment

  1. #1
    Junior Member
    Join Date
    Feb 2012

    Confused about self-employment

    I'm a graphic designer who does freelancing, but I also work as an employee for another business full time. Since I do my freelancing in my home office, I understand a percentage of my utilities is deducted and this percentage is reflected by the office space sq f vs the whole house sq ft.

    1. Since I use my cell phone mostly (more than 70%) for self employed work, does this go under the above deductible home/office utilities when doing my income tax? Where would it go if not?

    2. Is there a maximum value or percentage of utilities deducted in a home office that can go against income made?

    Much thanks!


  2. #2
    Senior Member stardancer's Avatar
    Join Date
    Apr 2009
    Northern Ontario
    You can write off a % of your cell phone as a business expense; be prepared to prove you used it for business calls

    The amount of utilities you can write off depends on the % of home use; example if you used 1 room out of 5 as an office for business use, then the eligible amount would be 1/5th of the expenses. If you show a loss of income/expenses then the use of home office expenses cannot be used to increase the loss, but the amount can be carried forward to a year in which you show a profit.

    Note: the 'home office' must be a room dedicated to such work; it cannot be a desk in the corner of your living room.

  3. #3
    Senior Member
    Join Date
    Jun 2009
    I am sure that you will find a quick trip to the accountant to be worth the money spent to learn the tax treatments of being self employed.

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  5. #4
    Senior Member Financial Cents's Avatar
    Join Date
    Jul 2010
    I recall for any home business/self-employed business at home, you need to calculate expenses as follows:

    % home used for home business x time spent for home business x expenses for year = eligible deduction.

    For example:

    150 sq. feet used for home business; out of a 1500 sq. foot home.
    Spend on average 4 hours per day for home business; out of 24 hours per day; 7 days a week.
    Utility or phone bill is $50 per month; for 12 months in 2011 calendar year = $600.

    Calculation is:

    150/1500 x 4/24 x $600 = $10.

    $10 can be expensed.

    This formula comes from the T4002 CRA tax guide, pages 28 & 29.
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  6. #5
    Senior Member
    Join Date
    Dec 2010
    East of GTA ,Ontario
    Financial cents is correct ,it is based on percentage of the house you use for business and you can also deduct that % of mortgage interest ,insurance and taxes as well.

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