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Are You Working From Home?

Erica Szczech - May 09, 2020
Working from home has become the new reality for many office workers. If you are new to the work-from-home (WFH) experience, keep in mind that there may be potential tax benefits.
Planning over paperwork

Working from home has become the new reality for many office workers. If you are new to the work-from-home (WFH) experience, keep in mind that there may be potential tax benefits.

The Current Situation

To be allowed a deduction for home-office expenses, the CRA requires one of the following conditions to be met: i) The work space is where you mainly do your work (more than 50 percent of the time); or ii) You use the workspace only to earn employment income, and it is used on a regular and continuous basis for meeting clients, customers, or others in the course of your employment duties. 

Three different types of workers may qualify: employees, commissioned salespeople and self-employed workers. Deductible expenses vary based on the type of worker, but generally include electricity, heating, maintenance, and supplies. Property taxes and home insurance can be claimed by commissioned salespeople and self-employed workers. Self-employed workers may also claim a portion of mortgage interest and capital cost allowance. The portion that can be claimed is based on the area attributed to the home office, as a proportion of the total finished area of the home.

For individuals who are not self-employed, in order to potentially deduct certain expenses, your employer must complete CRA Form T2200: Declaration of Conditions of Employment. Also note that any expenses reimbursed by the employer, such as internet costs or office supplies cannot be claimed.

Potential Changes to the Rules?

The current CRA rules normally require that you spend more than 50 percent of total work time in the home office during the tax year in order to claim these deductions. However, som accounting professionals have indicated that there may be exceptions. Give the current unprecedented circumstances in which people have been mandated to work from home for a portion of the year, the CRA may consider cases on an individual basis.

In the foreseeable future, it is likely that this threshold will be met by more workers as continued distancing efforts are expected to result in fewer workers returning to traditional office spaces.

For detailed information on allowable expenses, and related rules, consult the CRA or seek advice from an accounting professional or give us a call.