See GST/HST memorandum 8.2, Paragraph 8, Reference also to: Excise Tax Act 170(1)(a.1)
"A registrant is not entitled to claim an ITC in respect of the tax paid or payable on…, in relation to a work space (i.e., home office) in a self-contained domestic establishment in which the registrant or individual resides unless the work space:
is the registrant’s principal place of business; or
is used exclusively for the purpose of earning income from a business and is used on a regular and continuous basis for meeting the registrant’s clients, customers, or patients in respect of the business."
Note that Quebec will defer to Federal rules on the claim for ITC/ITR since they “harmonized” their sales tax with the Federal sales tax system.
To activate this option, add the GST/HST Number on form T2125 and the QST Number on the TP80, field 22 or 24. At that point, Taxcycle will ask you if it is to prepare a GST370 and the corresponding Quebec version for the ITC.
@LMK In a Zoom tax workshop this week, we were given an example of a home based office that was 5% of the square footage of the house. We were asked to calculate home office expenses and I said there wouldn’t be any because the office wasn’t 10% of the floor space. None of the other twenty people agreed with me that there was any limit to the %. So, I backed down - I don’t know where or how long ago I got that information. I was one of the oldest people on the call, but the one older person, the instructor, didn’t agree with me either. I guess you had the same dream I did.
Besides the % limitation - which I have never heard of either after doing taxes for 20+ years - you can’t take HST on all the expenses when some of them (property taxes etc) don’t have HST charged on them. This is what David_R_Officer is saying. You can take HST on the expenses the way you have calculated that do have HST like electricity however.
To be clear, what I always understood was that it had to be a certain %'age in order to claim any related ITC’s. Not a minimum % to deduct expenses on the T2125.
Cant find it in writing, though - maybe it was just internal office guidelines?