Article written by STEPHEN LANNI DE SEGAL LLP in the Canadian News Quarterly, a newsletter published by the Canadian member firms of Moore North America. These articles are part of our mission to become the partner of choice for your success by keeping you up to date.
Due to COVID-19, many employees had to work from home for much of calendar year 2020. As a result, new simplified rules apply for the 2020 tax year to allow individuals working from home to deduct home office expenses on their personal income tax returns.
New temporary fixed-rate method
If an individual has worked from home 50% of the time for at least four consecutive weeks, he or she is eligible for this new method.
This method will allow the individual to deduct $2 for each day he or she worked from home during the period. He can also deduct an additional $2 for each additional day he works from home.
The maximum under this method is $400 per individual.
If several people work from home, each individual can deduct up to $400 under this method.
This method does not require the individual to substantiate the work-at-home expenses by calculating the number of square meters of workspace. What’s more, the individual is not required to keep receipts for expenses related to working at home.
Detailed method
The detailed method will allow an individual to deduct specific work-at-home expenses incurred while working from home.
To qualify, the CRA lists the following criteria on its website:
- The individual worked from home in 2020 because of COVID-19 OR his employer asked him to work from home;
- He worked more than 50% of the time at home for a period of at least four consecutive weeks in 2020;
- The latter has a copy of the T2200S or T2200 form signed by his or her employer;
- The expenses were used directly to carry out the individual’s work.
Form T2200S is a new prescribed form applicable only to employees who worked from home due to COVID-19 in 2020. The form must be completed and signed by the individual and his or her employer, but the individual is not required to submit it to CRA. However, you must keep the signed form in case the CRA requests a copy.
If the employee is required to pay employment expenses other than work-at-home expenses, then form T2200 must be used.
Read more on the subject here.
