Cell Phone & Internet Deductions for the Self-Employed
Almost every Canadian freelancer pays for a phone plan and home internet, and almost every one of them handles the deduction wrong in one of two directions. Some claim the entire bill — an aggressive position that unravels the moment a reviewer asks whether the phone ever texts a friend or streams a show. Others claim nothing, assuming a personal phone can't be a business expense at all, and quietly donate hundreds of dollars a year back to the CRA. The correct answer sits in the middle: the business-use portion of both bills is deductible, and the whole exercise comes down to setting a percentage you can defend. This guide covers how to set that percentage, where the deduction goes on T2125, the special case of home internet, the device itself, and the GST/HST side.
The Rule: Business-Use Portion Only
Self-employed Canadians can deduct the business-use portion of cell phone airtime/data and internet service used to earn business income. Not the whole bill — the share of it that serves the business. If your phone is roughly 70% a business tool and 30% a personal device, roughly 70% of the plan cost is deductible.
On Form T2125, Part 4, these costs typically land on line 9220 (utilities) or line 8810 (office expenses). Both are defensible homes for communications costs; what matters is consistency — pick one line and use it every year, so your expense history reads cleanly. For where these lines sit in the full form, see our line-by-line T2125 guide, and for the complete deduction landscape, the master write-offs list.
Setting a Percentage You Can Defend
The CRA does not publish an approved percentage for phone or internet use. What it expects is a reasonable claim supported by some method — and the method that survives review is a usage audit of a representative month.
The Usage Review Method
- Pick a typical month — not your busiest, not your vacation month.
- Review the call log and data usage — most carriers itemize calls, and both iOS and Android break down screen time and data by app.
- Classify honestly — client calls, work email, invoicing apps, project research on one side; social media, streaming, family calls on the other.
- Write down the result and the method — a dated note ("Reviewed March usage: 41 of 58 hours business ≈ 70%") turns a guess into evidence.
Most full-time freelancers who run this exercise land somewhere in the 50–80% range — treat that as illustration, not entitlement. A claim backed by a documented review is defensible at almost any level; a round number pulled from the air is weak at any level.
Worked Example
| Item | Amount |
|---|---|
| Monthly plan (voice + data, before tax) | $95.00 |
| Documented business-use percentage | 70% |
| Monthly deduction | $66.50 |
| Annual deduction (× 12) | $798.00 |
The same percentage applies to the whole recurring bill — base fee, connection charges, and plan add-ons prorate together. You cannot claim the base fee at 100% and prorate only the overage.
What Doesn't Qualify
- Family lines on a shared plan. On a $180 family plan with three lines, only your line's share of the cost — then only its business percentage — is claimable. Your partner's and kids' lines are personal, full stop.
- The personal share of your own line. Obvious, but it is the number-one over-claim in this category.
- The device at 100% as a monthly expense. A phone you buy is a capital asset, not a recurring bill — see below.
The Device Itself Is a Capital Asset
The handset is treated separately from the plan. Inexpensive devices (roughly under $500) can often be written off in full in the year of purchase through the 100% capital cost allowance class; pricier phones are depreciated over several years under the CCA rules — and in both cases only the business-use portion of the cost counts. If your carrier bundles a financed phone into the monthly bill, keep the hardware and service portions identifiable. The CCA classes and rules shift over time, so confirm the current treatment with your accountant.
The Cleanest Position: A Dedicated Business Line
If you want to skip the percentage debate entirely, a second line used exclusively for business — a separate phone, or a second SIM/eSIM in a dual-SIM handset — is deductible at 100%, because there is no personal use to carve out. For freelancers whose phone costs are substantial, the price of a second line often pays for itself in deduction certainty and a cleaner audit posture.
Home Internet: Two Routes, Pick One
Internet has a wrinkle phone plans don't: it can be claimed either as a direct business expense at its business-use percentage, or as part of the business-use-of-home calculation in T2125 Part 7, prorated by your workspace percentage like rent and utilities. Never both — that double-counts the same bill.
| Route | How It's Prorated | Typical Result on a $90/mo Bill |
|---|---|---|
| Direct business expense | Business-use % of the connection (e.g., 60%) | ≈ $54/month |
| Inside business-use-of-home | Workspace % of the home (e.g., 10%) | ≈ $9/month |
For most freelancers who work online all day, the direct route produces the larger, more accurate deduction — a home office that occupies 10% of your square footage says nothing about a connection that exists 60% for client work. Whichever route you choose, apply it consistently and keep it out of the other calculation.
The GST/HST Side
If you're GST/HST-registered, the tax you pay on the business portion of these bills comes back as an input tax credit. On the $66.50 business share of a $95 Ontario phone bill, roughly $8.65 of HST is claimable as an ITC each month — small individually, meaningful across a year of phone and internet bills combined. The ITC follows the same business-use percentage as the deduction; claiming the full HST on a 70% business phone is the same over-claim in a different ledger. Our input tax credit guide covers the mechanics.
Documentation: Keep the Bills
This category needs two layers of paper: the monthly bills proving what you paid, and the usage note proving how you set the percentage. Carrier portals typically only retain 12–24 months of statements, so download them rather than trusting the portal to hold them for the six-year retention window — our receipt requirements guide covers how long records must survive.
Frequently Asked Questions
Can I claim 100% of my phone?
Rarely defensible on your only phone — some personal use is presumed. A dedicated business line or SIM used exclusively for work is the clean path to 100%.
Can I deduct the phone I bought, or just the plan?
Both, differently. The plan is a recurring expense at your business-use percentage; the device is a capital asset — often fully deductible in year one if inexpensive, depreciated over time if not — at its business-use share. Confirm the current CCA treatment with your accountant.
Should I claim internet directly or through the home-office calculation?
Pick one route, never both. The direct business-use route usually wins because business-use percentages (often 50%+) exceed workspace-area percentages (often ~10%).
What percentage is "safe" to claim?
There is no published safe harbour. A percentage backed by a documented usage review of a representative month is defensible; an undocumented round number is not. Most working freelancers land between 50% and 80%.
Do I really need to keep every monthly bill?
Yes — records supporting a return generally must be kept for six years, and carrier portals purge statements far sooner. Download or capture each bill when it arrives.