A company operates from the owner’s home: are electricity, rates, etc. deductible?

Author: SAIT Technical

Q: I would just like to clarify how to treat office expenses, if they are in the director’s name and not the company’s. The business is run from the director’s home, who owns the company. Electricity, rates etc, are in the director’s name. Can you still deduct them as a business expenses?

A: The problem here, that you foresaw, is that the company hasn’t actually incurred the expenditure and would therefore not meet the requirements of section 11(a) read with section 23. 

The company could, for instance enter into a rental agreement with the director, and that would create the expense.  It is not advisable to use an allowance and the director may find that section 23(m) prevents the deduction allowed under section 23(b) against his remuneration.  

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