Can I deduct home office expenses against salary from my Ontario corporation?

If your corporation pays you a salary and you work from a home office, you may be able to deduct a portion of home office expenses against your employment income on your personal T1 return. This is a federal rule. To claim the deduction, you must use the home office exclusively for work and meet it as your principal place of employment, or use it regularly to meet clients or customers.

The corporation must provide you with a signed T2200 form — Declaration of Conditions of Employment — confirming that you are required to maintain the home office and pay the expenses without reimbursement. The eligible expenses for employees include utilities, maintenance, and home internet, but not capital items like mortgage interest or property taxes for an employee (these are more relevant for self-employment).

Dividends do not generate employment income, so if you receive only dividends you cannot claim employment-related home office deductions on your personal return. This is another practical difference between salary and dividends. The corporate side may also have separate home office considerations if the corporation leases space from you — that is a separate arrangement with its own rules and must be structured carefully to avoid a shareholder benefit.