How should I claim internet costs if I work from home as self-employed?

If you use your home internet primarily for business, you have two options. First, you can claim the business-use portion of your monthly internet bill as a direct business expense (telephone and utilities line on Form T2125). If you use the internet 70% for business and 30% personally, you would deduct 70% of the annual bill.

Second, if you prefer to keep things simple and bundle home costs together, you can include your internet bill in your home office expense calculation and deduct the home office percentage of the total. However, for most home-based businesses, internet is used at a much higher business rate than, say, electricity, so claiming it separately at the actual business-use percentage typically yields a larger deduction.

The one firm rule is no double-counting: do not claim internet both as a direct business expense and in the home office bundle. Pick one approach and apply it consistently. If the business portion of internet is material, tracking usage (or documenting a reasonable estimate of business versus personal use) will support your allocation if the CRA asks.