If you freelance from home (or anywhere with Wi-Fi), you're almost certainly using your internet and phone for business. Client calls, Zoom meetings, email, Slack, uploading deliverables, researching for projects. That usage is tax-deductible.
The catch: most freelancers either skip this deduction entirely (leaving money on the table) or claim too much (inviting CRA scrutiny). This guide walks you through the right way to calculate and claim it.
What Counts as a Deductible Internet or Phone Expense
The CRA allows you to deduct the business-use portion of:
- Home internet (cable, fibre, DSL, fixed wireless)
- Mobile phone plan (voice, data, messaging)
- Secondary data plans (tablet data, mobile hotspot)
- VoIP services (business Zoom phone, RingCentral, Google Voice)
- Dedicated business line (landline or separate mobile number)
How to Calculate Your Business-Use Percentage
For shared personal/business services, you need to determine a reasonable business-use percentage. The CRA doesn't prescribe a formula, but here are two accepted methods:
Method 1: Time-Based Estimate
Track how many hours per week you use the service for business vs. personal. This works well for internet.
Total internet usage per week: 70 hrs
Business-use percentage: 30 / 70 = 43%
Annual internet cost: $85/mo × 12 = $1,020
Deductible amount: $1,020 × 43% = $438.60
Method 2: Usage-Based (Phone)
For phone plans, review one representative month of call logs and data usage. Count business calls/texts vs. personal.
Business calls: 45
Business-use percentage: 45 / 120 = 37.5%
Annual phone cost: $75/mo × 12 = $900
Deductible amount: $900 × 37.5% = $337.50
Where to Report on Your T2125
You have two options depending on your situation:
| Scenario | Where to Report | T2125 Line |
|---|---|---|
| Phone/internet as a direct business expense | Part 5 — Business expenses | Line 9220 (Telephone and utilities) |
| Internet as part of home office costs | Part 7 — Business-use-of-home | Included in home office calculation |
Which method is better?
If you work from home and already claim home office expenses, bundling internet into that calculation is simpler. The home office percentage (based on square footage) applies to your total home costs including internet.
If your business internet usage is significantly higher than your home office square footage percentage, claiming it separately under line 9220 with a usage-based percentage will give you a larger deduction.
Common Business Uses the CRA Accepts
- Client calls and video meetings (Zoom, Teams, Google Meet)
- Sending and receiving business emails
- Cloud storage and file sharing (Google Drive, Dropbox)
- Project management tools (Notion, Asana, Slack)
- Uploading deliverables to clients
- Research directly related to client work
- Online banking and invoicing
- Social media marketing for your business
- Software updates and downloads for business tools
What You Can't Claim
- Personal Netflix, gaming, or social media browsing (not business-related)
- Family members' phone lines on your plan (unless they work for you)
- Equipment costs like a new phone or router (these are capital expenses, claimed through CCA instead)
- One-time installation fees (but these may be deductible separately as a business expense)
Typical Deduction Ranges for Canadian Freelancers
| Expense | Typical Monthly Cost | Typical Business % | Annual Deduction |
|---|---|---|---|
| Home internet | $70–$120 | 30–50% | $250–$720 |
| Mobile phone (shared) | $60–$100 | 25–50% | $180–$600 |
| Dedicated business line | $20–$50 | 100% | $240–$600 |
| VoIP service | $15–$40 | 100% | $180–$480 |
Combined, a typical freelancer can deduct $400 to $1,500 per year in internet and phone expenses. Not life-changing, but it adds up, especially stacked with your other deductions.
How to Track Internet and Phone Expenses
- Save every bill. Download PDF statements monthly from your provider. Store them in a folder (digital is fine, the CRA accepts digital copies).
- Log your business-use percentage. Do a one-month tracking exercise at least once a year. Write down business vs. personal usage and calculate the percentage.
- Record the deduction monthly. Use a spreadsheet or our expense categorizer to log the business portion each month so it's ready at tax time.
- Keep the calculation. Save a one-page note explaining your method. Date it. If the CRA asks, you have your answer ready.
Track All Your Freelance Expenses in One Place
Our Expense Tracker spreadsheet has a dedicated Telephone & Utilities category, auto-calculates business-use percentages, and generates T2125-ready totals.
Get the FreelancerTax Bundle →CRA Audit Tips for Internet and Phone Claims
- Be reasonable. Claiming 80% business use on a family internet plan shared with four people will raise eyebrows. 30-50% is typical and defensible for a solo freelancer.
- Be consistent. Use the same percentage method year over year. Sudden jumps from 30% to 70% without explanation invite questions.
- Have documentation ready. Bills, a usage log, and your calculation note. That's all you need.
- Separate lines are bulletproof. A dedicated business phone number is the cleanest claim. No percentage debates.
Frequently Asked Questions
Can I claim internet if I don't have a dedicated home office?
Yes. You don't need a separate room to claim the business portion of your internet. You just need to use it for business. The home office deduction (Part 7) requires a dedicated space, but claiming internet under line 9220 does not.
What if my employer pays for my internet but I also freelance?
If your employer reimburses your internet, you can only claim the portion that's not reimbursed. If your employer pays 50% and your freelance business uses 30% of the remaining cost, you'd deduct 30% of 50%.
Can I deduct the cost of upgrading to faster internet for work?
The ongoing monthly cost difference between your old and new plan is deductible (business-use portion). One-time installation or equipment fees for the upgrade may be deductible as a business expense in the year incurred, depending on the amount.
What about a phone purchased for business?
A phone is a capital asset. If it costs over $500 (before tax), you'd claim it through Capital Cost Allowance (CCA Class 50, 55% declining balance). Under $500, you can expense it directly. Either way, only the business-use percentage is deductible.