Home office deductions for incorporated owners: what the corporation can and can't pay for

“My business runs out of my house — can the corporation just pay for my home office?” It is one of the most common questions incorporated owners in Maple Ridge and the Fraser Valley ask, and the honest answer is: yes, but not the way most people assume. Once you incorporate, you are usually an employee of your own company, and that changes the home-office rules compared with a sole proprietor. Here is what actually qualifies, and the traps worth avoiding.

Employee of your own corporation vs sole proprietor

This distinction drives everything. A sole proprietor deducts business-use-of-home expenses directly against business income, subject to the rule that the space is either their principal place of business or used exclusively for business and regularly to meet clients — and the deduction cannot create a loss (unused amounts carry forward).

An incorporated owner is an employee, so the home office is an employment expense with stricter conditions. To claim it personally you must be required to maintain the workspace as a condition of employment, hold a signed Form T2200 from your corporation, and meet the use test: the space is either where you mainly (more than half the time) perform your duties, or is used only to earn employment income and regularly for in-person meetings with clients or customers. Your claim is capped at your remaining employment income — it cannot create a loss.

Reasonable rent-to-corporation arrangements

Rather than claim an employment deduction, some owners have the corporation reimburse a reasonable, documented portion of home costs under an accountable plan — often the cleanest route. Others formally rent a portion of the home to the corporation: the corporation deducts the rent, and you report it as rental income personally, offsetting the related share of home expenses against it. Two cautions matter here. The rent must be reasonable — reflecting the actual space and fair value, not an arbitrary number — and you should generally not claim capital cost allowance on your home, because doing so can compromise the principal-residence exemption when you eventually sell. These arrangements are worth structuring with an accountant rather than improvising.

What expenses qualify

Whichever route you use, only the business-use portion of the home counts, usually based on the floor area of the workspace relative to the home. Typical shared costs include a reasonable share of heat, electricity, home insurance, maintenance and, depending on the arrangement, a portion of rent or mortgage interest and property tax. Personal-use portions never qualify, and anything the corporation has already reimbursed cannot also be claimed personally. Keeping the split defensible — and consistent — is what makes the deduction hold up.

The PSB overlay for single-client consultants

If your corporation essentially exists to provide your personal services to a single client you would otherwise be an employee of, it may be a personal services business (PSB) — and that changes everything. PSB status denies most ordinary corporate deductions and applies a higher tax rate, so debating a home-office claim misses the bigger exposure. Before you build a tax plan around corporate deductions, it is worth honestly assessing PSB risk; our guide to personal services business rules in Canada walks through the tests.

Records the CRA asks for

The paperwork is straightforward but non-optional: a signed T2200 if you claim an employment deduction, a calculation of the business-use percentage (usually floor area), receipts and statements for the underlying costs, and — if you rent to the corporation — a written arrangement and records of the rent and expenses. Keep these with your personal tax records; if the CRA reviews the claim, clean documentation is the difference between a quick confirmation and a denied deduction.

The bottom line

Yes, your home office can be paid for through your corporation — but as an employee, on the CRA's terms, with a T2200, a reasonable business-use split, and care around rent and CCA. An accountant in Maple Ridge who sets it up properly keeps the deduction clean and steers you clear of the principal-residence and PSB traps that quietly undo it.

This article is general information for Canadian business owners and is current as of July 2026. It is not tax advice, and your situation is unique — please speak with a CPA before acting on anything here.

About the author

Sunny Dhillon, CPA

Founder of EverStone CPA, an Abbotsford CPA firm, and a member of the Chartered Professional Accountants of British Columbia (CPABC). Sunny works with incorporated owners across the Fraser Valley and Canada on tax, bookkeeping and advisory. More about Sunny →  ·  Book a free consult →