I have a new client who runs a hair salon. She does all the laundry at her home. 2-4 loads per day; 6 days per week.
Her former preparer claimed her laundry room as a business-use-of-home expense and claimed everything related to that (4.81% based on laundry room dimensions) and her vehicle to drive back and forth to do it 20%. Pulled the ITCs for her GST returns from it.
Obviously, she can’t claim the vehicle driving back and forth to the salon. She isn’t making special trips for this. Brings it with her in the morning. Takes it home at night.
How would you calculate the laundry cost? The same way the other person did or some sort of per load estimate of what it costs to do that much laundry, say $2.50 as the incremental cost of water and electricity per load comes out to about $2400/year as a business expense and no home expenses claimed otherwise. (a laundromat would cost her $7 a load on average).
ETA: She does have an administrative office in her salon where she does her bookkeeping. This is just about how to deal with the washer/dryer, water/electric costs of doing laundry at home. I’ve already explained I won’t be using the motor vehicle expenses because there aren’t extra trips happening here.
I’d look at it in the same way as day-care use of a personal home: use the number of hours per year that the laundry room is used for “business” purposes and apply that “time usage” percentage on top of the area percentage. For example:
50 hours per year doing “business laundry” ÷ 8,760 hours per year = 0.5%
0.5% x 4.81% = 0.0275% of total home expenses relate to the business
Using hours seems silly. She isn’t standing there watching the laundry. But using that method: You can’t do 2-4 loads of laundry a day in an hour a week. Let’s say she’s exaggerating and does 2 loads a day at an 1 hour a load, 2 hours * 6 days a week, 50 weeks a year x 4.81% That’s .33%.
If I’m claiming use of home, I’m putting in insurance, mortgage interest, property taxes, and home alarm. That amounts to a few hundred dollars based on the expenses she gave me documentation for.
I wasn’t looking to claim business use of home. I’m trying to figure out a reasonable percentage of her water and electric bill to put in net income (loss) . 2*6=12 * 50 = 600 loads. For a salon, that seems like a reasonable number of loads. They go through a lot of towels.
In 2025, her water bill was $3334.80 and her electric bill was $2197.72 (I have the bills so those are the actual totals for the year). Averaging 10 other business clients’ water and electric usage for the year. She paid $1922 more in water and $522 more in electric than the average. It’s just her and her young son, so I took households with only 2 people. Her business use of home water and electric isn’t nothing. It’s a real expense to earn income.
If I used those totals, it’s about the same as what the previous preparer came to using 4.81% and treating it like a business office.
To be clear, i know averages can’t be used. I’m just trying to demonstrate here that this is a real expense. The next time a salon owner calls me; I’m hanging up
Your method might be acceptable - the ITA doesn’t prescribe a method for this, but someone (you or your client) may have to convince CRA to allow it. How much time are you willing to put into it, and how much hassle is your client willing to put up with?