In light of COVID-19 many employees have been required to work from home for a large portion of the 2020 calendar year. As such, new streamlined rules apply for the 2020 taxation year that will allow individuals working from home to claim home office expenses on their personal income tax return.
New Temporary Flat Rate Method
If an individual worked from home 50% of the time for a period of at least four consecutive weeks, the individual is eligible to use this new method.
This new method will allow the individual to claim $2 per day for each day the individual worked from home during the period. In addition, the individual can claim an additional $2 per day for each additional day that was spent working from home.
The maximum under this method is $400 per individual.
If there are multiple people working from home, each individual can claim up to $400, under this method.
This method does not require the individual to support the home office expenses by calculating square footage of workspace. In addition, the individual is not required to maintain receipts for home office related expenses.
The detailed method will allow an individual to claim specific home office related expenses incurred during the time an individual worked from home.
To be eligible, the CRA provides the following criteria on their website:
- The individual worked from home in 2020 due to Covid-19 OR was required to work from home by their employer;
- The individual worked more than 50% of the time from home for a period of at least four consecutive weeks in 2020;
- The individual has a signed Form T2200S or Form T2200 from their employer; AND
- The expenses incurred directly in the individuals work during the period.
Form T2200S is a new prescribed form applicable only to those employees that worked from home due to Covid-19 in 2020. The form must be completed and signed by the individual and their employer, but, the individual is not required to remit the form to the CRA. The individual is required to retain the signed form in the event the CRA requests a copy.
If the employee is required to pay for employment expenses other than home office expenses, Form T2200 should be used instead.
How We Can Help
Please contact your DMCL advisor for further assistance with these matters.
Contributed by Stephen Lanni from Segal LLP. This article is taken from our quarterly bulletin, Canadian Overview, published by Canadian member-firms of Moore North America. The articles in our bulletin are a part of our mission to become the ultimate ally in your success by keeping you informed about current events.