Canada Emergency Wage Subsidy – Dec 2020 Update
January 13, 2021
Personal Tax Filing Again! What’s NEW!
February 11, 2021
On 15 December 2020, the Canada Revenue Agency (CRA) released detailed guidance on the home office expense deduction that employees can claim on their 2020 personal income tax return. For 2020, there will be two alternate methods by which employees may be able to claim home office expenses:
- The new “temporary flat rate method”, which provides a deduction of $2 per workday at home (to a maximum of $400); and
- The “detailed method”, which is similar to the existing deduction for home office expenses, except that the category of eligible expenses has been expanded to include home internet access fees.
In order to reduce the administrative burden on employers, Form T2200, Declaration of Conditions of Employment will not be required for employees to claim a deduction under the temporary flat rate method. A simplified version of Form T2200 (which has been significantly abridged from the original) will be required for employees seeking to claim only home office expenses under the detailed method.
| Flat Rate Method | Detailed Method | |
|---|---|---|
| New eligibility requirements | (i) The employee worked from home in 2020 due to the COVID-19 pandemic; (ii) The work space in the home was the place where the employee mainly (more than 50% of the time) worked for a period of at least four consecutive weeks in 2020; (iii) The employee was required to pay at least some home office expenses (if reimbursement was received, it did not cover all expenses); and (iv) The employee is not claiming any other employment deductions. | (i) The employee worked from home in 2020 due to the COVID-19 pandemic, or was required by their employer to work from home; (ii) The work space in the home was the place where the employee mainly (more than 50%of the time) worked for a period of at least four consecutive weeks in 2020; (iii) The employee was required to pay at least some home office expenses (if reimbursement was received, it did not cover all expenses); and (iv) The employee received a signed Form T2200S or Form T2200 from their employer. |
| Maximum deduction | Flat $2 per day worked from home to a maximum of $400. Part days count as a day. | Deduct cost of office supplies and proportionate home office expenses. No maximum; however, the current year deduction cannot exceed employment income for the year. |
| Back up required | None, except for information to substantiate days worked from home. | Information to substantiate days worked from home, receipts for expenses, supporting calculations, Form T2200 or Form T2200S from employer. |
| Eligible expenses | N/A since flat $2 per day. | Full deduction for office supplies such as paper, toner, etc. required to perform employment duties to the extent reasonable and not reimbursed by employer. Proportionate utilities, home internet access fees, rent, maintenance and minor repairs (also home insurance and property taxes in the case of employees who earn commission income). The expenses must relate to the employee’s work space and to the period or periods during the year in which the employee worked from home. |
| T2200 required | No | Yes. Where only office supplies and home office expenses are sought to be deducted, the abbreviated Form T2200S is appropriate for employees working from home due to the COVID-19 pandemic. For employees seeking to claim expenses in addition to work from home expenses (such as motor vehicle expenses) or who are normally required to work from home (under their contract of employment), the standard Form T2200 is required. |
