Adapting to the New Normal
Your Home Office: There May Be Tax Benefits
For many office workers, working from home became a new reality in light of the spread of COVID-19. Workers who are new to the work-from-home experience should keep in mind that there may be potential tax benefits.
To be allowed a deduction for home-office expenses, the CRA requires one of the following conditions to be met: i) The workspace is where you mainly do your work (more than 50 percent of the time): or ii) You use the workspace only to earn employment income, and it is used on a regular and continuous basis for meeting clients, customers, or others in the course of your employment duties’
Three different types of workers may qualify: employees’ commissioned salespeople and self-employed workers. Deductible expenses vary based on the type of worker, but generally include electricity, heating, maintenance, and supplies. Property taxes and home insurance can be claimed by commissioned salespeople and self-employed workers. Self-employed workers may also claim a portion of mortgage interest and capital cost allowance. The portion that can be claimed is based on the area attributed to the home office, as a proportion of the total finished area of the home.
For individuals who are not self-employed, in order to deduct certain expenses your employer must certify that you were required to use your home as a workspace as a condition of employment, by completing CRA Form T2200: Declaration of Conditions of Employment. Also
note that any expenses reimbursed by the employer, such as internet costs or office supplies, cannot be claimed.
While the current CRA rules normally require that you spend more than 50 percent of total work time in the home office during the tax year in order to claim these deductions, some accounting professionals have indicated that there may be exceptions. Given the unprecedented circumstances in which people have been mandated to work from home for a portion of the year, the CRA may consider cases on an individual basis or may make adjustments to its policies.2.3
In the foreseeable future, it is likely that this 50 percent threshold will be met by more workers as continued distancing efforts are expected to result in fewer workers returning to traditional office spaces.
For detailed information on allowable expenses, and other related rules, please consult the Canada Revenue Agency or seek advice from an accounting professional.