The federal government announced in its fall economic statement that it’s proposing to allow Canadians working from home this year due to Covid-19 to claim “modest” expenses of up to $400.
The amount would be based on the time an employee works from home and would not require employees to track expenses or secure documentation from their employers attesting that they were required to work from home.
“This measure will help taxpayers access deductions they are entitled to receive and simplify the tax filing process,” the economic statement said.
“They’re trying to put in a simplified system,” said Jamie Golombek, managing director of tax and estate planning with CIBC Financial Planning & Advice. “So rather than adding up all your expenses, and dividing by how many square feet, and how many days or months you’re working from home, [the government will] let you write off $400. You don’t have to keep any receipts; there’s no detailed tracking required.”
Under current rules in the Income Tax Act, employees working from home can claim certain eligible home expenses, such as heating fuel, supplies, utilities, repairs and maintenance costs in respect of a home office. These expenses have to be allocated in the same proportion that the workspace occupies in a home. In order to claim these expenses, an employee must have their employer complete and sign Form T2200: Declaration of Conditions of Employment, which attests that the employee was required to work from home.
Taxpayers will still be able to claim under the existing rules if they choose, Golombek said.
“If someone is in a 450-square foot condo, and they’re using half the condo for work half the time, and they’re paying rent, that could be an enormous amount of home office expenses [that can be claimed].”
The proposal in the government’s fall economic statement is intended to provide a streamlined process to claim home office expenses, while addressing issues that would be raised if millions of Canadians now working from home asked their employers to complete and sign the T2200 form. The Department of Finance and the Canadian business and tax community have consulted in recent months on how the process might be expedited.
“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,” the economic statement said, “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 their employees who qualify.”
The government said that further details about the process will be communicated by the CRA in the coming weeks.
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