New Tax Deduction for Canadians Working From Home
By: Shaan Syed
As the COVID-19 pandemic has forced many Canadians to work from home, many people are wondering which home office expenses may be deductible for tax purposes.
The Canada Revenue Agency (CRA) has introduced a simplified temporary flat rate deduction available for individuals working from home.
Criteria under the new simplified “Temporary Flat Rate Method”:
- Form T777S has been introduced to simplify the process
- The simplified flat rate deduction applies to the Temporary Flat Rate Method (Option 1) on the new Form T777S
- Individuals are eligible if they were working from home for more than 50% of the time for at least four consecutive weeks in 2020 due to the COVID-19 pandemic
- Individuals can claim $2 for each day they worked from home due to the COVID-19 pandemic, up to a maximum of $400
- Employees will not be required to calculate the size of their workspace, keep supporting documents, or obtain a signed Form T2200, Declaration of Conditions of Employment, or the simplified Form T2200S from their employer
- Multiple residents of the same address can claim the deduction, provided that each claimant is eligible
- Individuals claiming a deduction for home office expenses using the Temporary Flat Rate Method cannot claim any other employment-related expenses
For individuals with larger claims for home office expenses, the traditional detailed method is also available with a new simplified process as well.
Criteria under the “Detailed Method”:
- Two new simplified forms (T2200S and T777S) have been made available for claimants
- Individuals are still required to obtain a completed and signed form from their employer
- Simplified process:
- Individuals can complete Form T777S (Option 2) and obtain their employer’s signature on Form T2200S; or
- Traditional process:
- Individuals can complete Form T777 and obtain their employer’s signature on Form T2200
- The CRA also expanded the list of eligible expenses for the home office deduction, which now includes home internet access
Below is a list of common eligible expenses for the home office deduction:
- rent paid for a house or apartment where you live
- electricity, water, heat, or the utilities portion of your home office or condominium fees
- maintenance such as minor repairs, cleaning supplies, light bulbs, paint, etc.
- home internet access fees
- office supplies such as stationery items, pens, folders, sticky notes, postage, toners, ink cartridges, etc.
- employment use of a basic cell phone service plan
- long distance calls for employment purposes
For a more detailed list and further information, please visit www.canada.ca/cra-home-workspace-expenses
Still have questions? Feel free to reach out to firstname.lastname@example.org and one of our tax specialists would be happy to provide a tax-planning consultation tailored to your specific needs.