With more and more Canadians working from home due to the COVID-19 pandemic, the Canada Revenue Agency (CRA) has simplified the way employees can claim the home office expenses deduction on their personal tax return for the 2020 tax year by way of a new temporary flat rate method. Employees with larger claims for their home office can still utilize the detailed method to calculate their home office expenses deduction.
What are the eligibility requirements for the new temporary flat rate method?
Canadians can claim the home office expenses deduction for 2020 if they have had to work from their home more than 50% of the time of at least four consecutive weeks in 2020 due to the COVID-19 pandemic. This shorter qualifying period ensures that more employees can claim the deduction, which would not have been possible under the existing method.
For full eligibility criteria of the new temporary flat rate method, please click here.
How does the new temporary flat rate method work?
Under the new temporary flat rate method, eligible employees can claim a deduction of $2 for each day worked at home in that period, as well as any other days they worked from their home in 2020 due to the COVID-19 pandemic, up to a maximum of $400 (200 working days), per individual. This new temporary flat rate method does not require employees to get a Form T2200 or Form T2200s completed and signed by their employer.
How does the detailed method work?
The CRA has introduced simplified versions of Form T2200S and Form T777S as well as a calculator specifically designed to assist with the calculation of eligible home office expenses for employees who want to continue to utilize the detailed method of calculating their home office expenses deduction.
List of eligible expenses:
The CRA has released an expanded list of eligible expenses, for employees utilizing the detailed method to calculate their home office expenses, which can be claimed as part of their home office expenses.
For a full list of all eligible expenses, please click here.
The new rules introduced will only be applicable to the 2020 tax year.
For full details on working from home expenses, please click here.
If you would like more information on this topic, please contact a member of the Empire CPA team by filling out the contact form below.
Canadian and foreign tax laws are complex and have a tendency to change on a frequent basis. As such, the content published above is believed to be accurate as of the date of this post. Before implementing any tax planning, please seek professional advice from a qualified tax professional. Empire, Chartered Professional Accountants will not accept any liability for any tax ramifications that may result from acting based on the information contained above.
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