The Minister of National Revenue provided additional details recently on how the Canada Revenue Agency (CRA) will make the home office more accessible for Canadians for the 2020 taxation year.
In our September Tax Alert, “Home office expense deductions during the pandemic,” we provided specific details related to the criteria needed in order to deduct home office expenses. One of the criteria discussed in this tax alert was the requirement to use your home office principally (more than 50 per cent) to perform employment duties. The CRA has routinely regarded this requirement as being met if the home office was used principally throughout the taxation year.
Now, according to the CRA’s announcement on Dec. 15, employees can meet this requirement as long as they worked from home more than 50 per cent of the time over a period of at least four consecutive weeks in 2020 due to COVID-19. The use of a shorter qualifying period (four weeks) will ensure that more employees can claim the deduction than would otherwise have been possible under the CRA’s longstanding practice.
A new temporary flat rate method will allow eligible employees to claim a deduction of $2 for each day they worked at home in that period, plus any other days they worked from home in 2020 due to COVID-19 (up to a maximum of $400). Under this new method, employees will not have to get Form T2200 or Form T2200S completed and signed by their employer.
Other options still exist for employees that do not wish to undertake the temporary flat rate method, such as:
- Complete the form T2200S (temporary - for use in 2020 only):
This simplified form is for claiming detailed home office expenses only. The employer completes and signs the form and provides it to the employee. The employee does not attach the form to their tax return, but must keep it with their records in case the CRA requests it at a later date. The employee would then claim home office expenses on form T777S.
- Complete the normal T2200:
This form is for claiming all employee related expenses including home office. The employee does not attach the form to their tax return, but must keep it with their records in case the CRA requests it at a later date. The employee would then claim home office expenses on form T777.
The temporary form T2200S is only to be used for claiming home office expenses. If other employment related expenses apply (e.g., vehicle, supplies, assistant, etc.) then form T2200 is the appropriate form.
The temporary form T777S also provides useful information about eligible and non-eligible home office expenses, and the CRA’s on-line calculator helps navigate through the home office calculations.
For any additional questions regarding home office expenses, please consult your local Baker Tilly advisor.
Related content
