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  ->  Employment Expenses -> Employee work space in home expenses

Employee Work-Space-in-Home Expenses

Income Tax Act s. 8(13)

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.

These expenses can be entered as "other expenses" in the Detailed Canadian Tax and RRSP Savings Calculator.

Working From Home re COVID-19

The 2020 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.

On December 15, 2020, CRA announced a simplified process:

bulletEmployees with larger claims for home office expenses can still choose to use the existing detailed method to calculate their home office expenses deduction.
bulletEmployees 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.
bulletNew 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.
bulletFor employees choosing the detailed method, simplified forms T2200S and Form T777S can be used.
bulletSee CRA's Home office expenses for employees.

Calculators for Working From Home Expenses

Canada Revenue Agency:

Calculate your expenses - calculator to assist with the calculation of eligible home office expenses.

Revenue Quebec:

Choose the method of calculating teleworking expenses that is the most advantageous for you

Teleworking Expenses Tool

CPA Canada / CRA Webinar

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:

bulletCommuting/home office expenses:
bulletAlthough 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.
bulletIn 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 employee.
bulletThis 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.
bulletBoth the above positions would be extended to the use of employer-provided motor vehicles for this kind of travel.
bulletEmployers should maintain appropriate records to demonstrate that allowances provided are reasonable in relation to commuting costs.
bulletEmployees using employer-provided vehicles need to keep records of kilometres driven when commuting between their home and the regular place of employment.
bulletParking:  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.
bulletHome 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.
bulletInternet / 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.

See also Working From Home Travel Expenses.  Travel to your employer's place of business may be deductible if not reimbursed by a tax-free vehicle allowance.

In order for expenses not reimbursed by the employer to be deductible, the work space must be either:

  1. the place where the individual mainly does their work, or
  2. 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 allowance may not be deducted.

Sales Commission Employees

Sales commission employees eligible to deduct work-space-in-home expenses may also deduct a reasonable portion of property taxes and home insurance, and reasonable monthly home internet access fees.  See CRA's Guide T4044 Chapter 2 - Employees earning commission income.

Salaried Employees - Home Internet Fees

In CRA's Guide T4044 under the heading of Chapter 3 - Employees earning a salary - Supplies (Computers, cell phones, and other equipment), previously indicated that "You cannot deduct the monthly access fees for home Internet service."  This was revised on January 29, 2021, for 2020 and later years, with a NOTE indicating You can include your reasonable monthly home internet access fees as part of your work-space-in-the-home expenses.

To find anything in the guide or on any web page or in any document, just do ctrl-f (find) and type the word or phrase you want to find.

T777 Statement of Employment Expenses

CRA form T777, Statement of Employment Expenses, is used to calculate the amount of the work-space-in-home expenses allowed.

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.

GST/HST 

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.

Canadian Tax and RRSP Savings Calculator

Line 22900 employment expenses can be entered in the "other deductions" line of the Canadian Tax and RRSP Savings Calculator.

Other Resources - Re COVID-19 Working from Home

December 2020 Life in the Tax Lane

Video Tax News December 15, 2020 - New Home Office Expense Claim Methods

BLG - CRA consults stakeholders on employee work-from-home expense deduction - includes CRA's proposed revised "short-form" T2200.

EY Canada - Could home quarantine mean home office tax deductions?

 - on this topic, the above information still applies, and see also the Video Tax News links below.

LawNow: Working from Home: Income Tax Issues

Video Tax News June 2020 Life in the Tax Lane - Telecommuting Allowances and Reimbursements

Video Tax News May 2020 Life in the Tax Lane - Working From Home

Canada Revenue Agency (CRA) Resources

Line 22900 Other Employment Expenses

T4044 Employment Expenses - including Employees working at home due to COVID-19

IT-352 Employee's Expenses, including work-space-in-home expenses (Archived)

T4130 Employers' Guide - Taxable Benefits and Allowances

Revised: July 13, 2021

 

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