A little more than 11 per cent of Canadians work out of home-based offices and workshops. A new Statistics Canada report says the number of home-based workers grew by about one per cent from 2000 to 2008 – a smaller increase than some futurists were predicting.

As we entered the 2000s, it was thought that most homes would soon have home offices and work spaces. With changes to technology, and particularly applications for the Internet, working at home was now possible for many different professions. Why fight traffic to a downtown office when you can just walk to your workplace and start working in your bathrobe?

While home offices are being embraced enthusiastically by the self-employed, the number of employees who work at home is growing more slowly.

The Statistics Canada report, by senior analyst Martin Turcott, says the slower than expected growth is mostly due to managers' reluctance. "They would rather continue managing behaviour (physical presence in the office for many hours) than results (completed tasks)," he says.

From the employer's point of view, there are some good reasons to have employees work at home, such as reduced office costs and not having to deal with supervisory issues. It's also assumed that most employees would welcome a chance to work at home, making them happier and more productive.

But the downside for employers is that the lack of supervision can also mean less accountability, communication issues and security concerns about sensitive company data.

For employees, working at home is not for everyone. They may miss the social interactions of the workplace and may feel less motivated while home alone. They may also have to deal with family issues while they are trying to work, or be tempted to deal with household matters that take away their attention from the job.

However one strong segment of the home-buying public who want a home office or workspace is the self-employed.

The report says that even though only 15 per cent of all workers in Canada are self-employed, they account for about half of those who work at home, and this number is growing much more rapidly. From 2006 to 2008, the number of self-employed people working at home grew from 54 per cent to 60 per cent.

Among self-employed workers, women were more likely than men to work at home (67 per cent compared to 56 per cent) but the opposite was true for employees. "Some self-employed women probably chose to work at home (temporarily or permanently) because of their family responsibilities," says the report. "This group of women entrepreneurs has even been dubbed 'mompreneurs' by some."

The number one reason why most people work at home is because "they have no choice" or because it is a job requirement, Statistics Canada found. The second most common reason (23 per cent of survey respondents) is because home provided "better working conditions" and that home was "their usual place of work."

Another idealistic notion is that now workers can stay connected to the workplace from anywhere, more people will work from their recreational properties or move to a more rural setting. But the Statistics Canada report finds that isn't happening. "In 2008, employees who lived in metropolitan areas were more likely than those who did not to work at home. This is consistent with a similar study in the United States."

Those most likely to work from a home office were university graduates who make at least $60,000 per year, working in the professional, scientific and technical services sectors.

In Canada, you can deduct expenses for your home office or workshop on your income tax return. If you are self-employed, you must be able to prove it is your principal place of business or that you use the space only to earn your business income. It must be used on "a regular and ongoing basis" to meet your clients, customers or patients.

If you live in the home and use a room or two for business, you must calculate what percentage of the home is used for work purposes, and then deduct that portion of your home operating expenses. You can deduct part of your property taxes, mortgage interest and capital cost allowance, as well as heating, home insurance, electricity and cleaning materials. If you rent your home, you can deduct part of the rent and expenses relating to the workspace.

For employees, if you do more than 50 per cent of your work at the home office, you can deduct the part of your costs that relates to your work space, but not mortgage interest or capital cost allowance.

Published: January 4, 2011

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Jim Adair is editor of REM: Canada's Real Estate Magazine, a business publication for real estate agents and brokers. He has been writing about Canadian real estate, home building and renovation issues for more than 30 years. You can contact Jim at .