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Work from home? Get a $400 tax deduction

As per the federal government announcement this week, the Canada Revenue Agency (CRA) will allow employees working from home due to COVID-19 to claim up to $400 in ‘modest expenses’ — and guess what? no questions asked!

Photo by Vlada Karpovich from Pexels

For Canadian that have not worked from home before, it might come as a surprise people can already deduct home office expenses when submitting their tax returns. Now, with so many people working from bedroom and kitchen this year, the federal government is looking to simplify the process.

According to the federal government’s Fall Economic Statement released Nov. 30, for 2020, the Canada Revenue Agency will allow employees working from home due to COVID-19 to claim up to $400 in “modest expenses.” 

“Millions of Canadians are unexpectedly working from home because of COVID-19. They are turning their bedrooms, basements and kitchens into offices, and taking on increased household expenses to do their jobs. Canadians working from home can already deduct certain home office expenses for tax purposes, but first-time claimants may not be familiar with the rules and the claim process imposes an administrative burden on employers who are already dealing with the broader impacts of the pandemic and have to fill out additional information for heir employees who qualify.”

According to the economic statement, Canadian employees can generally avoid the T2200 form, Declaration of Conditions of Employment, which an employer usually fills out confirming to the CRA that their employee has incurred mandatory expenses while working from home. Further details on how the process is expected to function are expected in the coming weeks

The current rule now is that you can deduct expenses you paid in 2020 for the employment use of a work space in your home, as long as you had to pay for them under your contract of employment. These expenses must be used directly in your work and your employer has not reimbursed and will not reimburse you. Also, you must meet one of the following conditions:

  • The work space is where you mainly (more than 50% of the time) do your work.
  • You use the work space only to earn your employment income. You also have to use it on a regular and continuous basis for meeting clients, customers, or other people in the course of your employment duties.

But what about now? No one is meeting clients home, and this is where this relief came from.

We at JA Accounting have been calculating this for our clients for years using the old method as a percentage of the area and time used. However, we are still waiting for more info from the government on how this new $400 relief will be treated. Stay tuned and visit us frequently for more info.

– Jad Antonios, Dec 04, 2020

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