CRA provides new rules for claiming home office expenses

The Canada Revenue Agency (CRA) released details on its new home office expense rules Tuesday, introducing a temporary flat-rate method for employees with modest expenses to claim up to $400, and a shortened Form T2200 declaration for those claiming expenses through the traditional method.

The agency also provided a new calculator on its website to help employees claiming home office expenses.

Employees who worked from home more than 50% of the time over a period of a least four consecutive weeks in 2020 due to the pandemic will be eligible to claim the home office expenses deduction for 2020. Prior CRA eligibility guidance indicated that employees needed to be principally working from home — meaning more than half the time — for the year.

The CRA said in the release that the shorter qualifying period will ensure more employees can claim the deduction.

The temporary flat-rate method, which was first announced in the fall economic statement, will allow eligible employees to claim a deduction of $2 for each day they worked from home in 2020 due to Covid-19, up to a maximum of $400.

Under this method, employees will not have to get Form T2200 or a Form T2200S completed and signed by their employer. The new method also eliminates the need for employees to determine their expenses to calculate their claim. However, employees who use the temporary flat-rate method can’t claim any other employment expenses (for example, motor vehicle expenses).

Under the detailed method, eligible employees working from home in 2020 due to Covid-19, or employees who were otherwise required to work from home, can claim the amount paid for eligible expenses, supported by documents.

For employees choosing to file under this method, the CRA also launched simplified versions of the Form T2200S, Declaration of Conditions of Employment for Working at Home Due to Covid-19 and Form T777S, Statement of Employment Expense for Working at Home Due to Covid-19.

For employees using the detailed method, the CRA expanded the list of eligible expenses to include home internet access fees. The CRA provided a comprehensive list of all eligible expenses on its website.

“The Government of Canada remains committed to helping Canadians cope with the impacts of the Covid-19 pandemic by making the home expenses deduction more accessible, and easier to claim,” said National Revenue Minister Diane Lebouthillier in a release. “The temporary flat rate method and the new user-friendly calculator will make it easier for more Canadians to claim the deductions.”

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.