Tuesday Nov 29, 2022

Home Sweet Home: Deducting Home Office Expenses Just Got Easier – Employment and HR – Canada – Mondaq News Alerts

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The Canada Revenue Agency (CRA) recently released comprehensive
information on a new simplified process for deducting home office
expenses for 2020. For millions of Canadians, this is the first
year in which they are eligible to deduct certain expenses related
to working from home on their taxes. It will also be the first year
that many employers are navigating their responsibilities with
respect to a remote workforce.

This bulletin discusses both the regular process for deducting
employment-related home office expenses and the new simplified
process for 2020.

REGULAR PROCESS FOR DEDUCTING EMPLOYMENT-RELATED EXPENSES

An employee may deduct certain limited employment-related
expenses from income if:

  • The employee is required to incur the expense under his or her
    employment contract
  • The expense is reasonably regarded as applicable to earning
    employment income
  • The expense is not reimbursable by the employer
  • The employee has a copy of Form T2200 completed and executed by
    the employer

To be eligible for home office expenses, an employee must either
(1) be required to maintain a home office where the employee
principally performs his or her duties (i.e., more than 50 per cent
of the time), or (2) have a work space that is used exclusively for
meeting with clients in person on a regular basis.

Form T2200 is an employee-specific form that sets out certain
conditions of employment, including reimbursed expenses, allowances
and home office information. Many employers have been concerned
about the time and resources required to complete Form T2200 for
their employees.

OVERVIEW OF NEW SIMPLIFIED PROCESS FOR 2020

The federal government announced in its 2020 Fall Economic Statement released on
November 30, 2020, that it would be simplifying the process for
employees who worked from home due to COVID-19 and are eligible to
claim tax deductions for home office expenses. Details were limited
in the statement, however, the CRA released comprehensive information on the new process
on December 15, 2020.

For the 2020 tax year only, employees who have worked from home
for at least one month due to COVID-19 can choose to deduct home
office expenses using either the temporary flat rate method or the
detailed method. Eligible employees will complete and submit new Form T777S with their tax return.

Employees who worked from home in 2020 for reasons unrelated to
COVID-19 or have employment expenses other than supplies or home
office expenses must follow the usual process and obtain the
regular Form T2200 from their employer.

Temporary Flat Rate Method

Overview. The new temporary flat rate method
will allow eligible employees to deduct C$2 per day for every day
worked at home due to COVID-19, without regard to the expenses
actually incurred, up to a maximum of C$400.

Eligibility. To be eligible for the temporary
flat rate method, an employee must have worked from home due to
COVID-19 more than 50 per cent of the time for a period of at least
four consecutive weeks in 2020. Employees who chose to work from
home when given the option are still eligible for the temporary
flat rate method. Employees may count the days in the four-week
period and any other day the employee worked from home due to
COVID-19. Employees are not permitted to count days off, vacation
days, sick leave days or other leaves of absence. Eligible
employees may still claim the deduction if their employer
reimbursed some home office expenses.

Required Documents. Employees will not need any
other supporting documents or …….

Source: https://www.mondaq.com/canada/employee-benefits-compensation/1143788/home-sweet-home-deducting-home-office-expenses-just-got-easier

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