Employee Work-Space-in-Home Expenses
Employees may deduct work-space-in-home expenses if their contract of employment requires them to pay the expenses, and the expenses are not reimbursable by the employer.
Canada Revenue Agency (CRA) form T2200, Declaration of Conditions of Employment, should be completed by the employee and employer in order to claim these expenses. These expenses are entered as a deduction from income on line 22900 (line 229 prior to 2019) of the personal income tax return. The employee will only be able to deducted the expenses that the employer required them to pay, and not all expenses will be deductible.
If you worked from home or are still working from home as a result of the COVID-19 pandemic, it's important to get in writing from your employer that you are/were required to work from home, and what expenses you are/were required to pay for without reimbursement. This is especially important to do NOW, in case your employer is one of the unfortunate ones that will go out of business. At a minimum, get emails from your employer about this. An amended employment contract would be ideal. A T2200 would be very helpful. There will likely be a new T2200-short related to working from home during the pandemic (see below), but it wouldn't hurt to get the current T2200 completed now.
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. They will generally not request that employees provide a signed form from their employers.
Further detail will be coming from CRA.
In the October 26, 2020 CPA Canada - CRA webinar on CEWS and more, the issues of home office expenses, commuting, parking, and home office equipment are discussed, Some of the points made:
Commuting/home office expenses:
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Although parking, and travel between the employee's home and place of employment are usually a taxable benefit, a reasonable allowance for additional commuting costs incurred by the employee while the employee continues to work at the employer's place of business, or while working from home, will not be considered a taxable benefit during the pandemic.
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In situations where the employee continues working at their regular place of employment, CRA will not consider the employee to receive a taxable benefit where their employer pays for, reimburses, or provides a reasonable allowance for additional commuting costs incurred by the employee.
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This position is extended to situations where the employee is working from home because the regular place of employment is closed, and CRA would not consider the employee to receive a taxable benefit where the employer pays for, reimburses or provides a reasonable allowance for commuting costs incurred by the employee to travel to the regular place of employment, say to pick up computer equipment or perhaps other office equipment so that they can work from home.
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Both the above positions would be extended to the use of employer-provided motor vehicles for this kind of travel.
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Employers should maintain appropriate records to demonstrate that allowances provided are reasonable in relation to commuting costs.
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Employees using employer-provided vehicles need to keep records of kilometres driven when commuting between their home and the regular place of employment.
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Parking: When the regular place of employment is closed due to COVID-19, the CRA will not consider that an employer-provided parking spot at the place of employment available to an employee’s use would result in a taxable benefit.
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Home office equipment: CRA will not consider an employee to receive a taxable benefit where the employer pays or reimburses up to $500 for computer or home office equipment to enable the employee to carry out their duties. They would expect that the employee would have receipts that they’ve provided to their employer. Equipment could include chairs, desks, monitors and some computer equipment. If the employer pays or reimburses over $500, the excess must be included in the employee’s income as a taxable benefit – unless ownership is retained by the employer.
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Internet / Cell phones: Some employers may choose to reimburse their employees’ internet or cell phone costs. The CRA’s existing policies maintain that the portion used for employment purposes would not result in a taxable benefit in some circumstances.
