Yes — internet service is a legitimate deductible business expense for Canadian self-employed freelancers and consultants. The key is claiming the appropriate business-use percentage and keeping documentation. Here is exactly how to do it correctly.
The Basic Rule: Business Portion Only
If you use your home internet connection for both business and personal purposes — which almost everyone does — you can deduct only the business-use portion on your T2125.
The CRA expects a reasonable and documented split between business and personal use. There is no prescribed percentage — you calculate what is genuinely appropriate for your situation.
What Percentage Can You Claim?
Common approaches and their defensibility:
| Scenario | Reasonable Claim |
|---|---|
| Full-time work-from-home freelancer, also streams video and browses personally | 50–75% |
| Freelancer with a separate employer-paid office internet, home internet mainly personal | 20–30% |
| Business internet line used exclusively for work (rare in residential settings) | 100% |
| Mixed-use household with multiple people using the connection for personal purposes | 30–50% |
50% is the most commonly defended claim for sole-proprietor work-from-home freelancers. The CRA rarely challenges a 50% internet claim that is consistent from year to year and supported by the nature of the business.
Home Office Calculation vs Direct Expense: Which Method?
Internet is usually claimed as a direct business expense on T2125 (under “Telephone and utilities” or “Other expenses”) rather than run through the home office (Part 7) calculation.
This is because internet is a business tool in its own right — not purely a facility cost like rent or heat. Claiming it separately is simpler and more defensible:
- Annual internet cost: $1,200
- Business use: 50%
- Deductible amount: $600
- Enter $600 on the “Telephone and utilities” or “Other expenses” line of T2125
Separate Business Internet Plan: 100% Deductible
If you have a dedicated business internet plan — a separate line or account used exclusively for business — the full cost is deductible. This is more common for businesses with heavy data requirements or VPN needs, where a dedicated connection makes operational sense. Keep the account statement showing it is a separate, business-designated account.
Documentation
- Keep your internet service invoices or annual statement showing the monthly cost
- Note your estimated business-use percentage and the rationale (e.g., “50% — full-time work from home; personal streaming and browsing account for the other 50%”)
- Keep this note in your records for 6 years along with the invoices
Frequently Asked Questions
Can I claim internet and home office expenses at the same time?
Yes — if you calculate your home office deduction using the square footage method (Part 7 of T2125), you should exclude internet from the Part 7 calculation and claim it separately. If you include internet in the Part 7 home office calculation, do not also claim it separately — that would be double-claiming the same expense.
What about mobile data plans?
The same principle applies — claim the business-use percentage of your mobile plan. If you use your phone 60% for business (calls, email, project management apps), claim 60% of the monthly plan cost. Keep phone bills and a brief note of your usage split. See the separate guide on claiming phone bills as a self-employed Canadian.
Do I need to claim internet through the home office calculation if I claim home office expenses?
No. The CRA allows internet to be claimed as a standalone expense under “Telephone and utilities” on T2125, separately from the home office (Part 7) calculation. Most accountants advise this approach because it is simpler and makes the claim more visible and defensible. Just ensure you do not claim the same internet cost twice.