CRA provides details on deducting work-from-home expenses for 2021, 2022

The CRA has provided updated guidance on how people who worked from home last year due to the pandemic can claim up to $500 of home office expenses under its simplified flat-rate method for 2021 and 2022.

The agency also issued a simplified Form T2200, just as it did last year, for use by employers in cases where employees choose to claim home office expenses under the detailed method.

As with the 2020 tax year, the CRA indicated that people who worked more than 50% of the time from home in 2021 for a period of at least four consecutive weeks due to the Covid-19 pandemic can claim $2 for each day worked from home during that period. They could then also claim $2 for each additional day worked at home in the year due to the pandemic.

The maximum amount an individual can claim for 2021 is $500 (i.e., $2/day multiplied by a maximum of 250 eligible days), up from $400 for 2020 (maximum of 200 days).

Taxpayers will also be able to use the flat-rate method under the same rules for the 2022 tax year, also to a maximum of $500.

In December 2020, the government introduced the temporary flat-rate option to allow employees to claim home office expenses without having to track their expenses or obtain Form T2200: Declaration of Conditions of Employment. In December 2021, the federal government confirmed it would extend the flat-rate option for home office expenses to the 2021 and 2022 tax years.

Employees can still choose to claim expenses under the “detailed method” if they expect their eligible expenses to be higher than the maximum amount under the simplified method. For employees using the detailed method, the CRA expanded the list of eligible expenses to include home internet fees. The CRA provides a comprehensive list of all eligible expenses on its website.

To be eligible to claim the work-from-home deduction under the detailed method, the employee needs to obtain from their employer a signed Form T2200 and must principally — meaning more than half the time — perform their job at home or use their home office exclusively for earning income and for meeting with customers on a regular or continuous basis.

For the 2020, 2021 and 2022 tax years, the CRA eased the administrative rules governing eligibility for work space in the home expenses under the detailed method. As with those applying under the simplified method, employees who worked from home more than 50% of the time over a period of a least four consecutive weeks due to the pandemic would be eligible.

The CRA also issued a simplified Form T777: Statement of Employment Expenses (Form T777S) for 2021, just as it did for 2020. Employees using the detailed method must attach either Form T777 or T777S to their income tax return when claiming home workspace expenses.

Earlier this month, and separate from the work space in the home guidance, the CRA indicated employees could be reimbursed by their employer for up to $500 in costs related to computer equipment, office chairs and other eligible expenses related to working from home because of the pandemic for the period of March 15, 2020 to Dec. 31, 2021, as long as receipts were provided to the employer, without the CRA regarding the reimbursement as a taxable benefit to the employee.

The $500 is the maximum amount that can be reimbursed to each employee under this administrative position, from March 15, 2020 to Dec. 31, 2021, and is not for each piece of computer or office equipment, the CRA indicated.

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.