T2125 Home & Rental Office Space

I have a new client, mortgage broker, whom has a home office and rents an office in the city. He lives 150+km from the city and has been spending 1-3 days per week in the city rental space.
Is he allowed to claim rent expense on both spaces and how would travel be expensed when traveling from home office to 2nd office in the city?

His previous tax preparer passed away and I am doing a catch up for 3 years.

Any suggestions, insight, etc. is greatly appreciated.

Thank you

Several comments come to mind:

  • Does the home office meet all the home office requirements? If so he may claim home office expenses. Any space he uses exclusively to meet clients may be claimed.

  • Travel to and from work would not count as travel expense. The only travel he would claim is to and from clients premises or other business related travel. Travel to the city would be no different from travelling to a job in the city.

At least this is the way I would deal with him.

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Taxpayers often dream of tax deductions growing on trees…

You might want to explain to the client how S18(12) negates the home office expenses dream, and how S18(1)(h) negates the personal travel expenses dream…

(Hopefully he has been keeping proper business records pursuant to S230 - 3 years behind sounds like a bit of a red flag for a person earning business income…)

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@joe.justjoe1; are you suggesting that there can only be one “principal place of business” or are you referring to the “exclusive - regular and continuous” requirement?

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If you took the recent Video Tax News Tax Update, there was an interesting case where a worker who lived in Ontario (Ottawa I think), who took a job with a company in Winnipeg. His intention was to move to Winnipeg, but over a fairly lengthy time period her maintained a “home office” in Ottawa. He periodically travelled to the Winnipeg office and claimed travel expenses. CRA said no, taxpayer objected the judge said "No, that it was his choice to not have moved to Winnipeg - travel and home office expenses were disallowed.

If you didn’t attend that Tax Update and would like me to look it up and give more specific info, let me know.

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Hey Tome

What I conclude from your words that the guy is spending 1-3 days in city rented office that means he is spending the other days at home office to earn the revenue, so I find no harm in the claim which can easily be justified. You need to keep records (to evidence) for the revenues earned from rented space and home office.

The travel expenses, I highly doubt that he would be able to justify for commutation between home office and rented office and as such would be hard to claim.

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Thank you everyone for your responses and insight. Very much appreciated.