Yes — the business portion of your phone bill is deductible as a self-employed Canadian. The key is claiming a defensible business-use percentage and keeping your phone bills as documentation. Here is the complete guide.
How the Phone Deduction Works
Your phone plan — monthly plan fee, data, and any add-ons — is deductible in proportion to your business use. This applies whether your phone is on a personal plan or a business plan. The CRA looks at how much of your phone usage is genuinely for business purposes.
Hardware (the phone itself) is a separate question — see below.
What Percentage Can You Claim?
| Usage Pattern | Reasonable Claim |
|---|---|
| Freelancer who rarely calls clients but uses phone for email and project apps | 30–50% |
| Consultant who spends several hours per day on client calls | 60–80% |
| Phone used exclusively for business (very rare in practice) | 100% |
| Phone rarely used for business; occasional email checks | 20–30% |
The CRA does not specify a maximum percentage for phone claims, but it expects a reasonable and consistent estimate. 50% is widely used and generally accepted without challenge for typical work-from-home freelancers. Claiming 100% of a personal smartphone plan is harder to defend unless you have a separate personal phone.
Where the Deduction Goes on T2125
Phone costs are claimed under “Telephone and utilities” on T2125 or under “Other expenses.” Enter the deductible portion (not the full bill). For example:
- Annual phone bill: $1,440 ($120/month)
- Business-use: 60%
- Deductible: $864
- Enter $864 on T2125 under “Telephone and utilities” or “Other expenses”
Can You Claim the Phone Itself (Hardware)?
If you purchased a new smartphone primarily for business, the phone is a capital asset eligible for CCA depreciation. Smartphones are typically Class 10 (30% declining balance) or Class 50 (55% declining balance) depending on their primary function. The business-use percentage applies to the CCA claim as well.
Many freelancers choose not to capitalize a smartphone separately, especially a relatively inexpensive phone or one purchased primarily for personal use. If the phone cost under ~$500 and is not exclusively a business tool, expensing a reasonable business portion directly as “Office expenses” is commonly accepted.
Separate Business Phone Plan: 100% Deductible
If you have a dedicated business phone line — a separate SIM or phone number registered as a business account and used exclusively for business — 100% of that plan is deductible. Keep the account invoices showing the business designation.
Documentation
- Keep your monthly phone bills or annual account summary
- Record your estimated business-use percentage and reasoning
- A brief written note (kept with your records): “Phone plan claimed at 60% — used for client calls, business email, and project management apps. Remaining 40% personal.”
Frequently Asked Questions
Can I claim both my home internet and my phone bill in the same year?
Yes — these are separate expenses with separate claims. Claim the business portion of your internet plan independently of your phone plan. Both go under “Telephone and utilities” or “Other expenses” on T2125 as separate line items.
What if my spouse or partner is also on the same family phone plan?
If you are on a shared family plan, only your portion of the plan cost (approximately your share of the total) is attributable to you, and then only the business-use percentage of your share is deductible. For example, a $200/month family plan with 4 lines: your share is $50/month, and if 60% is business, you deduct $30/month = $360/year.
Does claiming a phone deduction trigger a CRA audit?
Not on its own. Phone deductions are common and the CRA’s systems are looking for outliers relative to industry and income norms, not any single expense category. A 50–60% phone deduction by a freelancer is typical and unremarkable. A 100% phone deduction on a single personal plan without documentation is more likely to draw attention.