Canada Revenue Agency announced this week that they are temporarily simplifying and expanding the office-in-home deductions for employees.
Background
Traditionally office-in-home deductions are only allowed when the employer has a contractual expectation that the employee fulfill some of their duties at home; the deductions are then based on actual expenses incurred in residing in the home (usually utilities and rent), and then reduced proportionate to the square-footage of the home dedicated to the employment duties.
This requirement carries a significant burden of documentation on the employee – keeping the actual receipts for the expenses, documenting a rationale for what percentage of square footage is appropriate, and the employer must also sign and provide a T2200 to the employee confirming the contractual expectation.
Simplified calculation
For 2020, the office-in-home deduction has been greatly simplified. So long as an employee has a period of at least four consecutive weeks in 2020 where they worked from home more than 50% of the time for reasons due to COVID-19, they are entitled to claim a deduction of $2 for each day that they worked from home, to a maximum of $400. If a household has multiple individuals that meet the criteria, each eligible employee is entitled to claim the flat rate deduction.
Note that once the eligibility requirement of 50% and four consecutive weeks is met, all days from home qualify, even if out of the consecutive weeks period. For example, if someone worked from home for all of April and May, returned to the office in June, and then in November worked 50% from home, those November days would also qualify.
If the employee uses the simplified calculation, they will not need their employer to sign any forms confirming their eligibility but in addition they will be unable to claim any other employment expenses (for example motor vehicle expenses).
Detailed calculation
Alternatively, if an employee meets the eligibility requirement of 50% and four consecutive weeks and has determined that a detailed calculation would result in a larger deduction, they can do so, based on the actual expenses incurred during the period worked from home and the proportionate square-footage. If the employee chooses the methodology, they must ask their employer to complete “T2200S’, a new form used solely for these detailed office-in-home claims.
