The federal government will extend the flat-rate option to allow Canadians to deduct home office expenses for the 2021 and 2022 tax years.
The maximum amount that employees can deduct under the simplified method has also been raised to $500 from $400 in 2020, the government announced on Tuesday as part of the economic and fiscal update.
The move was made “to continue to support Canadians working from home due to the pandemic,” a backgrounder document stated. The government has not yet introduced draft legislation in Parliament to make the change.
In their 2021 federal election campaign platform, the Liberals promised to extend the simplified flat-rate deduction and raise the deductible amount to $500.
Last year, the government introduced a temporary flat-rate option that allowed employees working from home to claim $2 for home office expenses for every day in 2020 they were required to work from home due to the pandemic. Individuals filing under this “simplified method” weren’t required to track their expenses or obtain a Form T2200: Declaration of Conditions of Employment from their employer to claim work-from home expenses.
Employees could still choose to claim expenses under the “detailed method” if they expected their eligible expenses to be higher than the maximum allowable amount under the simplified method, as long as they obtained a signed T2200 from their employer. For employees using this method, the CRA expanded the list of eligible expenses to include home internet fees. The CRA provides a comprehensive list of all eligible expenses on its website.
To be eligible to claim the work-from-home deduction under the detailed method, the employee needs to obtain from their employer a signed Form T2200 and must principally — meaning more than half the time — perform their job at home or use their home office exclusively for the purpose of earning income and for meeting with customers on a regular or continuous basis.
In 2020, the CRA eased the administrative rules governing eligibility for work space in the home expenses, indicating that employees who worked from home more than 50% of the time over a period of a least four consecutive weeks due to the pandemic would be eligible. The CRA also provided employers with a shorter, simplified version of the T2200 for the 2020 tax year, the T2200S, which could be used in most cases where an employee was working from home due to the pandemic.
So far, the CRA has not provided guidance on claiming work-from-home expenses for 2021 or indicated whether it will provide employers with a simplified version of Form T2200. In a Dec. 8 email to Advisor’s Edge, the CRA indicated that “guidance for employers and individuals [on work from home expenses] for the 2021 tax year will be released in due course.”