GST/QST on Home Office Expenses in Quebec: What You Can Claim and How to Calculate ITCs/ITRs Properly

Introduction

With more Quebec entrepreneurs working from home — consultants, freelancers, e-commerce sellers, and corporate directors — the GST/QST rules for home office expenses have become a major audit focus for Revenu Québec.
Home offices create a unique challenge: the same home is used for both personal and business purposes, which means only a portion of expenses is eligible for input tax credits (ITCs) and input tax refunds (ITRs).
This guide explains which home office expenses qualify, how to calculate business-use percentages, and how to avoid the documentation errors that frequently lead to denied credits.

Legal and Regulatory Framework

Under the Excise Tax Act (GST) and the Quebec Taxation Act (QSTA):

• Home office expenses may qualify for ITCs/ITRs only when the space is used exclusively or primarily for business purposes.

• Mixed-use expenses (utilities, rent, internet) must be prorated.

• Claims require documentary proof and reasonable allocation methods.

• Only expenses incurred after registration qualify for ITCs/ITRs.

• Proper invoices must include supplier information and GST/QST registration numbers.

• Businesses must maintain six years of records under ETA s.286 and QSTA s.24.

Authorities enforce eligibility rules through:

• ETA s. 169(4) / QSTA s. 39 — documentation requirements

• ETA s.141.01 — commercial activity test

• ETA s. 240 — registration requirements

Key Court Decisions

Canadian courts have ruled that:

• The space must be clearly identifiable as a workspace, not incidental or casual use.

• Allocations based on square footage must be reasonable and consistent.

• “Primarily” means more than 50% business use.

• Personal comfort or convenience does not justify claiming home office ITCs/ITRs.

• Inadequate documentation or vague estimates result in immediate denial.

These rulings reinforce that home office claims must be precise, justified, and well documented.

Why CRA and Revenu Québec Target These Issues

Home-based businesses are frequently reviewed because:

• Many taxpayers overstate business-use percentages.

• Evidence of exclusive or primary use is usually weak or missing.

• Expenses like heat, hydro, and rent often lack proper allocation.

• Some try to claim capital improvements made to personal residences.

• Mixed-use internet and cellphone expenses are often incorrectly coded.

• Large refund claims in the first year attract attention.

Industries most affected include consulting, IT services, marketing, design, tutoring, real estate, and online coaching.

Mackisen Strategy

We help clients calculate accurate, audit-proof home office claims.

1. Workspace Assessment

We determine whether your space qualifies as:

• Exclusive-use workspace, or

• Primary-use workspace

2. Square Footage & Allocation Methodology

We calculate:

• Total square footage of the home

• Square footage of the workspace

• Allocation percentages for utilities, rent, and insurance

• Adjustments for shared/common areas

3. Eligible Expenses Review

We assess each expense category:

• Hydro, gas, heating

• Internet and phone

• Rent or mortgage interest (corporations only)

• Property taxes and condo fees (corporations only)

• Minor repairs

• Office equipment and furnishings

4. ITC/ITR Documentation

We ensure all invoices include:

• GST/QST numbers

• Clear descriptions

• Proof of payment

• Correct payor names

5. Audit Defence

If Revenu Québec requests a review, we prepare:

• Square footage calculations

• Floor plans

• Usage evidence

• Documentary proof

• Legal argumentation referencing ETA/QSTA

Real Client Experience

A freelance marketing consultant claimed 40% of her home expenses based on “time spent working.” Revenu Québec denied the entire ITC/ITR claim, arguing the space was not exclusively or primarily used for business.
Mackisen reclassified the claim based on square footage, recovered a portion of the credits, and provided proper documentation going forward.
This case shows that accurate methodology makes or breaks GST/QST home office claims.

Common Questions

1. Can I claim GST/QST on rent or mortgage?
Rent: possibly, with proration.
Mortgage: no, unless the business legally owns the property.

2. Can I claim internet?
Yes — for the business-use portion only.

3. What if my home office is in the living room?
It must meet exclusive or primary-use rules. Shared spaces are harder to justify.

4. Can corporations claim more expenses than sole proprietors?
Yes — corporations may claim capital or ownership-related expenses if properly structured.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps businesses stay compliant while recovering the taxes they’re entitled to. Whether you’re claiming home office expenses or preparing GST/QST returns, our expert team ensures precision, transparency, and protection from audit risk.

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GST/QST home office rules explained. Learn what home expenses qualify, how to calculate business-use percentages, and how to claim ITCs/ITRs correctly in Quebec.