Working from home expenses
As a result of COVID-19, many people have found themselves working from home. You may be asking yourself what, if anything, can I deduct as an employment expense? The 2020 Fall Economic Statement announced that the Home Office Expense Deduction will be simplified due to millions of Canadians unexpectedly working from home because of COVID-19. CRA will allow employees working from home in 2020 due to COVID-19 with modest expenses to claim up to $400, based on the amount of time working from home, without the need to track detailed expenses.
In order for the expense to be deductible, your employer must have required you to pay it, and must not have reimbursed you for the cost. This year CRA will generally not request that employees provide a signed form from their employers, however it is highly recommended that you get in writing that you have been required to work from home and what expenses, if any, your employer has required you to pay. You may do this in an amended employment contract, by you and your employer completing a T2200 Declaration of Conditions of Employment or, at the very least, an email from your employer specifically outlining these conditions.
As an employee required to use space in your home for work, you can deduct the part of your costs that relates to your work space, such as the cost of electricity, water, heating and maintenance. If you are a commission sales person, you can deduct a portion of property taxes and home insurance. However, you cannot deduct mortgage interest or capital cost allowance on certain assets unless you are self employed. Also, if renting, a reasonable portion may be deducted.
Another important note on working from home during these times, is the cost of home office equipment. The employer may pay or reimburse up to $500 towards computer and office equipment required to work from home. Amounts above $500 will be considered a taxable benefit unless the employer maintains ownership. Therefore, it is important to discuss this with your employer prior to the purchase of these items.
If you would like our assistance in deciding whether your home workspace expenses are deductible please do not hesitate to contact us!