CRA has provided two new options for claiming employment expenses related to working from home in 2020.
- New – Temporary Flat Rate Method – where employees can claim a flat rate amount of $2/day to a maximum of $400. Under this method, no employer certification is required.
- Simplified Detailed Method – for employees who claim actual expenses related to working from which must be supported by receipts. Employer certification is required.
Overview of working from home expenses
|Temporary Flat Rate Method||Simplified Detailed Method – Only working from home expenses||Historical Detailed Method – Any Employment Expenses|
|Employer certification required?||No||Yes – New T2200S||Yes – T2200|
|Eligible employees||Working from home due to COVID-19||Working from home due to COVID-19||Working from home due to employer requirement|
|Computation||$2/day worked from home, max $400||Claim actual amounts paid as per receipts||Claim actual amounts paid as per receipts|
|T1 Form to Complete||New T777S||New T777S||T777|
|Can you claim other employment expenses if eligible?||No||No||Yes|
|Can the work space also be used for personal purposes?||Yes – no change to the claim||Yes, expenses are prorated based on space and hours used for employment purposes.||Yes, expenses are prorated based on space and hours used for employment purposes.|
|Impact of employer reimbursement||No claim if all expenses are reimbursed||Reimbursements will reduce your eligible deduction||Reimbursements will reduce your eligible deduction|
New – Temporary Flat Rate (TFR) Method
If employees that worked from home more than 50% of the time for a period of at least 4 consecutive weeks in 2020 due to COVID-19, they can claim $2/day up to a maximum of $400. Full-time or part-time days will count, while vacation days, sick days, or other leaves of absences do not count. If you choose to use this new method, you cannot claim other employment expenses.
To claim the TFR, you must meet all the following conditions below:
- You worked from home in 2020 due to COVID-19;
- The employee worked more than 50% of the time from home for more than 4 consecutive weeks in 2020;
- You are not claiming other employment expenses; and
- You did not receive any reimbursement from your employer for home office expenses. If your employer reimbursed some of the home office expenses, the employee can still make a claim.
If multiple people work from the same home and each meet the above criteria, each person is still eligible to claim a full TFR amount.
Simplified Detailed Method – Only Working from Home Expenses
This method requires the same calculation as done in the past for home office expenses but allows for a simplified T2200S and T777S.
To be eligible, you must meet the following conditions below:
- Worked from home in 2020 due to COVID-19;
- Employee was required to pay for expenses related to work space in home;
- Worked more than 50% of the time from home for a period of at least 4 consecutive weeks;
- Signed T2200S from employer; and
- Expenses were used directly in the work during the period.
If multiple employees are working from the same home and share the work space, you should each calculate your respective employment use of the space.
New T2200S Form
Employers must certify that employees are eligible to claim working from home expenses using a new form called T2200S. The form asks three questions:
- Did this employee work from home due to COVID-19?
- Did you or will you reimburse this employee for any home office expenses?
- Was the amount included on the employees T4 slip?
What are eligible work space in home expenses?
- Electricity, heat, water, maintenance and repair costs related to the use of their work space in home. Commissioned employees may also claim home insurance and property taxes.
- Internet fees
- Office supplies
- Cell phone or land line
Please note, capital expenditures, such as mortgage interest/principal payments, furniture and equipment, computers and their accessories, and other electronics are not deductible against employment income.
Contact Argento CPA if you have any questions about whether you are earning investment income or business income.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.