CRA: Employers can now reimburse home office furniture tax-free

The Canada Revenue Agency (CRA) has added home office furniture to the list of expenses that employers are allowed to reimburse tax-free — as long as the expenses were related to the Covid-19 pandemic, a CRA official said at the national conference of the Canadian Tax Foundation on Tuesday.

The agency allows employers to reimburse employees up to $500 in allowable expenses without taxing that amount.

Previously, the CRA had indicated that only employer reimbursements of personal computer equipment expenses would be eligible for tax-free treatment under the $500 threshold. Reimbursed amounts above the threshold would be treated as as a taxable benefit for the employee.

According to a CRA technical interpretation released in April, an allowance paid by the employer to an employee for the purpose of acquiring equipment for teleworking would be considered a taxable benefit for the employee.

However, if the amount paid by the employer was conditional on a proof of purchase being submitted by the employee, then the CRA would not tax a reimbursement for the purchase of personal computer equipment up to $500 if the purchase were mainly for the benefit of the employer and was made in the context of the Covid-19 pandemic.

During the CRA roundtable portion of the conference, the official indicated that the $500 threshold for the tax-free employer reimbursements would now be extended “to office furniture or other home office items and not limited to computers.”

The CRA official added that the agency had no plans to increase the $500 threshold exemption amount, but said “the CRA is monitoring the situation and we’ll take further action if necessary.”

The official said that employees should provide invoices to the employer in order to receive their reimbursements.

Rudy Mezzetta

Rudy is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on tax, estate planning, industry news and more since 2005. Reach him at rudy@newcom.ca.