CRA: Working from Home Expenses & Benefits

As a result of the unprecedented challenges due to COVID-19, many employees have been working from home. In response, the Canada Revenue Agency (“CRA”) has introduced new reporting measures for employers and employees.

Qualifying employees will be able to claim a deduction for certain home office expenses (work-space-in-the-home expenses, office supplies, and certain phone expenses). Using either the new temporary flat rate method or the detailed method.

Employers may now provide certain benefits, allowances, or reimbursements to ensure that their employees are not unduly subject to harm when performing their employment duties, including transportation costs, home office equipment, and meal costs.

An employee who worked more than 50% of the time from home for a period of at least four consecutive weeks in 2020 due to the COVID-19 pandemic, will be able to claim $2 for each day worked from home during that period. The maximum that can be claimed is $400 per individual.

This method can only be used for the 2020 tax year.

Good News for Employers!

Employers will not be required to complete and sign Form T2200S or Form T2200 under the temporary flat rate method.

Detailed Method

  • Employees who worked from home in 2020 due to the COVID-19 pandemic OR Eligible employees required to work from home
  • Employees may claim the actual amounts spent
  • Size and use of the work space determines the percentage an employee may claim for work-space-in-the-home expenses

Eligibility Detailed Method

    • The employee was required to pay for expenses related to the work space in their home
    • The work space is where the employee primarily (more than 50% of the time) conducts work for a period of at least four weeks OR the work space is used exclusively to earn employment income
    • The expenses relate directly to the employee’s work
    • The employee must be in possession of a completed and signed Form T2200S
      OR  Form T2200, from their employer

Form T2200S

Form T2200SEmployers will be required to complete and sign either Form T2200 or Form T2200S if the employee choses to use the detailed method to calculate their home office expenses.

The new Form T2200S is a shorter version of Form T2200.

Eligible Expenses

  • Electricity
  • Water
  • Utilities portion of condo fees
  • Maintenance and minor repairs
  • Heat
  • Home internet access fees
  • Rent

Ineligible Expenses

  • Home internet connection fees
  • Furniture
  • Capital expenses
  • Principal mortgage payments
  • Mortgage interest
  • Wall decorations

Employer-Provided Benefits & Allowances

In light of the COVID-19 pandemic, CRA has made changes to the way benefits and allowances are calculated for the term from March 15, 2020 to December 31, 2020

Employers may now provide certain benefits, allowances, or reimbursements that will not be considered to be taxable benefits, including:

  • Employer provided parking that is closed/not being used due to the pandemic
  • Employer reimbursement for home office expenses (up to a maximum of $500)

The following commuting costs (including parking) will not be considered to be taxable benefits: 

  • Employer reimbursement/allowance for additional commuting costs during the COVID-19 pandemic that are over and above normal commuting costs
  • Employer reimbursement/allowance for normal or additional commuting costs to travel to the workplace for any purpose that enables them to perform their employment duties from home (e.g., to pick up equipment)

 

The article in this update provides general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hunter Liberatore Law LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hunter Liberatore Law LLP. ©

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