Can you write off your cell phone expenses?
If you use your cell phone for business and personal calls you may have wondered how much of the cost you can deduct on your tax return each year.
Canada Revenue Agency indicates in Guide T4002 Business and Professional Income 2015 that “You can deduct expenses for telephone and utilities, such as gas, oil, electricity, and water, if you incurred the expenses to earn income.”
But you might ask “What if 100% of my cell phone expense was not incurred for earning business income? I use my cell phone personally as well.”
Canada Revenue Agency’s website indicates that they do not consider your personal use of a cell phone service to be a taxable benefit to you if all of the following apply:
- The plan’s cost is reasonable.
- The plan is a basic plan with a fixed cost.
- Your use of the service does not result in charges that are more than the basic plan cost.
So your monthly cell phone charges are fully deductible so long as you subscribe to a fixed and reasonable cell phone plan and your personal use does not result in additional charges.
If you do incur charges for personal-use then that incremental cost would not be a deductible expense for income tax purposes.
If you are an employee of a business, for you to be eligible to deduct your cell phone expenses your employer needs to indicate that, as a condition of your employment, you are required to pay for the use of a cell phone on question 9 of form T2200 Declaration of Conditions of Employment.
If your employee pays you an allowance for your cell phone you must reduce your expense claim by the amount of the allowance when filing your personal income tax return.