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Employee Work Space in Home Expenses
Canadian Tax and
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Employees may deduct work-space-in-home expenses if their
contract of employment requires them to pay the expenses,
and the expenses are not reimbursable by the employer.
Canada Revenue Agency (CRA) form T2200,
Declaration of Conditions of Employment, should be
completed by the employee and employer in order to claim
these expenses. These expenses are entered as a deduction from income on
line 22900 (line 229 prior to 2019) of the personal income tax return. The
employee will only be able to deducted the expenses that the employer required
them to pay, and not all expenses will be deductible.
Working From Home re COVID-19
Fall Economic Statement announced that the Home Office Expense Deduction
would be simplified due to millions of Canadians unexpectedly working from home
because of COVID-19.
Employees with larger claims for home office expenses can still choose to
use the existing detailed method to calculate their home office expenses
Employees who worked for home more than 50% of the time over a period of
at least 4 consecutive weeks in 2020 due to COVID-19 will now be eligible to
claim the home office expenses deduction for 2020.
New temporary flat rate method will allow eligible employees to claim a
deduction of $2 for each day they worked at home in that period, plus any
other days they worked from home in 2020 due to COVID-19 up to a maximum of
$400. Neither Form T2200 or Form T2200S will have to be completed for this.
For employees choosing the detailed method, simplified forms T2200S
T777S can be used.
CRA has provided a calculator
to assist with the calculation of eligible home office expenses.
In the October
26, 2020 CPA
Canada - CRA webinar on CEWS and more, the issues of home office expenses,
commuting, parking, and home office equipment are discussed, starting at 29:40
of the webinar. Some of the points made:
Commuting/home office expenses:
Although parking, and travel between the employee's home and place of
employment are usually a taxable benefit, a reasonable allowance for
additional commuting costs incurred by the employee while the employee
continues to work at the employer's place of business, or while working
from home, will not be considered a taxable benefit during the pandemic.
In situations where the employee continues working at their regular
place of employment, CRA will not consider the employee to receive a
taxable benefit where their employer pays for, reimburses, or provides a
reasonable allowance for additional commuting costs incurred by the
This position is extended to situations where the employee is working
from home because the regular place of employment is closed, and CRA
would not consider the employee to receive a taxable benefit where the
employer pays for, reimburses or provides a reasonable allowance for
commuting costs incurred by the employee to travel to the regular place
of employment, say to pick up computer equipment or perhaps other office
equipment so that they can work from home.
Both the above positions would be extended to the use of
employer-provided motor vehicles for this kind of travel.
Employers should maintain appropriate records to demonstrate that
allowances provided are reasonable in relation to commuting costs.
Employees using employer-provided vehicles need to keep records of
kilometres driven when commuting between their home and the regular
place of employment.
Parking: When the regular place of employment is closed due to COVID-19, the CRA will not consider that an employer-provided parking spot at the place of employment available to an employee’s use would result in a taxable benefit.
Home office equipment: CRA will not consider an employee to receive a taxable benefit where the employer pays or reimburses up to $500 for computer or home office equipment to enable the employee to carry out their duties. They would expect that the employee would have receipts that they’ve provided to their employer. Equipment could include chairs, desks, monitors and some computer equipment. If the employer pays or reimburses over $500,
the excess must be included in the employee’s income as a taxable benefit – unless ownership is retained by the employer.
Internet / Cell phones: Some employers may choose to reimburse their employees’ internet or cell phone
costs. The CRA’s existing policies maintain that the portion used for employment purposes would not result in a taxable
benefit in some circumstances - see T4130.
In order for expenses not reimbursed by the employer to be deductible, the work
space must be either:
the place where the individual mainly does their work, or
used exclusively for earning employment income, and
used on a regular and continuous basis for meeting
customers or other persons in the course of performing
the job (this likely would include Zoom meetings).
Allowed expenses include heat, electricity, light
bulbs, cleaning materials, maintenance, etc. If the home
is rented, a reasonable portion of the rent may be
deducted. Mortgage interest and capital
cost allowancemay not be deducted.
commission employees eligible to deduct work-space-in-home
expenses may also deduct a reasonable portion of property taxes and
In CRA's Guide
T4044 under the heading of Supplies (Computers, cell phones, and other
equipment), it indicates that "You cannot deduct the monthly access fees
for home Internet service." To find anything in the guide or on
any web page or in any document, just do ctrl-f and type the word you want to
The work-space-in-home expenses can only be used to reduce
employment income. They cannot be used to create or increase a loss from
employment income. Any expenses in excess of the employment income can be
carried forward to be used in the next tax year.
The work-space-in-home expenses will include any GST/HST or
provincial sales taxes incurred. You may be eligible for a refund of the
GST/HST included in the costs. See Employee
and Partner GST/HST rebate on the GST/HST page.