Cellphone and internet: splitting business from personal use

Few people have a phone or internet connection used only for business, so these are among the most misclaimed small business expenses, usually because a split was guessed once and repeated for years.

Claiming cellphone and internet costs as a business expense

The CRA’s guidance on business expenses allows telephone and utilities incurred to earn income. A mixed-use bill is deductible only for the business portion, which must be worked out, not assumed. The CRA internet expense test is the same: a home connection is deductible only to the extent it is used to earn income, on a basis you can support.

Utility costs for a home workspace are claimed as business-use-of-home expenses, not a separate line, so if you claim a home office, do not count them twice.

What a defensible split looks like

There is no prescribed percentage. What the CRA expects is a reasonable basis you can explain and support. In practice that means one of:

• A usage sample. Review a representative period of itemized billing or call and data logs, work out the business share, and apply that percentage for the year — the same logic as keeping a mileage log for a vehicle.
• A line count. Where a plan covers several lines and one is used only for business, that line’s cost is straightforward.
• Hours or devices for internet. A home connection shared by a household is rarely mostly business. Tie the estimate to something — work hours against total household use, or the share of the home used for work.

Cell phone allowance or company plan: if your corporation pays

For an incorporated owner who is also an employee of the company, a second set of rules applies. The CRA’s guidance on cell phone and internet services sets out the administrative policy:

• The device. Where the employer provides a cell phone it owns and requires the employee to use it as part of their employment duties, the fair market value of the device is not a taxable benefit. If the employee buys the phone and the employer reimburses them, the administrative policy does not apply and the fair market value is a taxable benefit.
• The plan. A service plan is not a taxable benefit where all of the CRA’s conditions are met: the employer requires the employee to use the plan as part of their duties, the plan has a reasonable fixed cost, and the employee’s personal use does not result in additional charges beyond the plan cost. Extra charges caused by personal use are a taxable benefit unless the employee reimburses them.
• Home internet. Where the employer provides or reimburses home internet, the business-use portion is not a taxable benefit and the personal use is taxable.
• Allowances. A cash allowance for phone and internet is always a taxable benefit under the CRA’s policy.

Employers must be able to justify the plan cost as reasonable for the job. Put simply, a CRA cell phone allowance paid in cash is always a taxable benefit, while a company-owned phone or a qualifying plan can be provided without one.

Related: The company car taxable benefit: what owning a vehicle in your corporation really costs.

Writing off a cell phone for business: common mistakes

Common errors: claiming the full bill for a personal phone or household internet, counting a utility twice through a home office claim and a separate line, and running a personal plan through the corporation with no benefit reported. Each is small, but easy for a reviewer to spot and project across years. A separate expense account helps; see a chart of accounts for small business.

The Maple Ridge commuter consultant

A Maple Ridge consultant serving Vancouver or Burnaby clients works from a phone and home connection. A corporate plan with a reasonable personal-use estimate is easier to defend than a personal plan expensed at a percentage. Accountants in Maple Ridge BC.

The bottom line

Phone and internet are deductible to the extent they earn income, and when a corporation pays for an owner-employee, taxable-benefit rules apply too. Pick a supportable percentage and keep the calculation. If your company pays these directly, have a CPA confirm the reporting before it becomes a multi-year pattern.

Whether any of this applies to you turns on your year-end, your structure and what else is in the picture — ask about your own situation and a CPA replies, usually the same business day. Free either way.

This article is general information for Canadian business owners and is current as of July 2026. It is not tax, legal or accounting advice, and it does not create a client relationship. Tax rules change and your situation is unique, so please speak with a CPA before acting on anything here.