Introducing a simplified process for claiming the home office expenses for Canadians working from home due to the COVID-19 pandemic
December 15, 2020 Ottawa, Ontario Canada Revenue Agency
This year has been filled with unprecedented challenges due to the COVID-19 pandemic. Many Canadians unexpectedly had to work from home which resulted in millions of Canadians setting up their work space in their kitchens, bedrooms and living rooms.
In response, the Honourable Diane Lebouthillier, Minister of National Revenue, provided today additional details on how the Canada Revenue Agency (CRA) has made the home office expenses deduction available to more Canadians, and simplified the way employees can claim these expenses on their personal income tax return for the 2020 tax year. Employees with larger claims for home office expenses can still choose to use the existing detailed method to calculate their home office expenses deduction.
Employees who worked from home more than 50% of the time over a period of a least four consecutive weeks in 2020 due to COVID-19 will now be eligible to claim the home office expenses deduction for 2020. The use of a shorter qualifying period will ensure that more employees can claim the deduction than would otherwise have been possible under 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.
To simplify the process for employees choosing the detailed method, the CRA launched today simplified forms (Form T2200S and Form T777S) and a calculator designed specifically to assist with the calculation of eligible home office expenses.
For more information on working from home expenses go to Canada.ca/cra-home-workspace-expenses.
“The Government of Canada remains committed to helping Canadians cope with the impacts of the COVID-19 pandemic by making the home expenses deduction more accessible, and easier to claim. The temporary flat rate method and the new user-friendly calculator will make it easier for more Canadians to claim the deductions and is one more demonstration of the CRA’s commitment to ensuring our tax system meets the needs of Canadians.”
-The Honourable Diane Lebouthillier, Minister of National Revenue
“Chartered Professional Accountants of Canada is among those key organizations that have been working closely with senior CRA and Finance Canada officials, providing expertise and feedback to better streamline the approach on home office expenses for employers and employees. We recognize that the CRA has taken a number of steps to make claiming working at home costs easier for employees and to reduce the compliance burden for those employers who provide T2200 forms to their employees.”
-Bruce Ball, Vice-President, Tax, Chartered Professional Accountants of Canada
“We commend the government for collaborating with key stakeholders, including Canada’s payroll professionals. Today’s announcement is a ‘win-win’ for Canadian businesses and workers alike. It provides a fair and straightforward way for millions of workers, forced to work from home by the pandemic, to claim tax deductions for which they are eligible. Waiving the employee’s need for a T2200 or T2200S will save employers over $194 million collectively, while being able to focus more intently on critical business needs. The Canadian Payroll Association looks forward to continuing to work alongside the government to support Canada’s economic recovery in the year ahead.”
-Peter Tzanetakis, President, The Canadian Payroll Association
Home office expenses can be claimed as a deduction on an employee’s personal income tax return. Deductions reduce the amount of income they pay tax on.
For those using the detailed method to calculate their home office expenses, the CRA has expanded the list of eligible expenses that can be claimed to include home internet access fees. A comprehensive list of all eligible expenses is available online.
According to Statistics Canada, “Working from home continues to be an important adaptation to COVID-19 health risks, with 2.4 million Canadians who do not normally work from home doing so in October.”
The CRA engaged many stakeholders in the fall of 2020 about the simplified Form T2200 and work-space-in-the-home expenses prior to introducing these temporary measures. For more information, go to the Backgrounder – Consultation on the simplification of Form T2200.
The new temporary flat rate method to calculate the deduction for home office expenses was announced on November 30th in the Fall Economic Statement.
- Backgrounder – Simplifying the process for claiming a deduction for home office expenses
- Backgrounder – Employer-provided Benefits and Allowances: CRA and COVID-19
- Backgrounder – Consultation on the simplification of Form T2200
- Home office expenses for employees
- Frequently asked questions – Home office expenses for employees
- Form T2200S Declaration of Conditions of Employment for Working at Home During COVID-19
- Form T777S – Statement of Employment Expenses for Working at Home Due to COVID-19
- Infographic: Working from home?
Office of the Minister of National Revenue
Canada Revenue Agency
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