Keeping the lights on and the phone working at your business premises is a deductible cost. On Form T2125, it goes on line 9220, Utilities, which the printed form groups as telephone and utilities.
What belongs here
Expenses for telephone and utilities — such as gas, oil, electricity, water, and cable — if you incurred them to earn income.
Telephone has its own wrinkles:
- long distance calls you made on your home telephone for your business
- the basic monthly rate of a separate telephone used for business calls only
- the share of air-time expenses for a cellphone you use to earn your business income
What does not belong here
The basic monthly rate of your home telephone. You cannot deduct it, even if you take business calls on that line. Only the business long distance calls on it are deductible.
Utilities for a workspace in your home. Those have to be claimed as business-use-of-home expenses, in the home-office part of the form. That is a share of the household bills, worked out from the space you use.
What to keep
Keep a record of all your income and expenses, with the documents behind them. Utility and telephone bills are the document here, and the itemized bill is worth more than the payment: it is what separates a basic monthly rate from long distance calls, and business air-time from the rest.
Don't send them in with your return. Keep them in case the Canada Revenue Agency (CRA) asks to see them. Business records follow the same six-year retention rule as your personal documents.
Official CRA sources
Source: Canada Revenue Agency (canada.ca). Not tax advice.