Following the closure of many workplaces and offices in 2020 due to COVID-19, thousands of workers across Canada found themselves working from home for the first time.
The good news for home workers is that there are a number of tax reliefs that can be claimed to improve their tax position. In this guide, we will outline everything you need to know about claiming working from home expenses in Canada, including:
- How does the new flat-rate method work?
- How does the detailed method work?
- What are the eligibility requirements for the new temporary flat rate method?
- What is Form T2200S?
- What is Form T777S?
- Who can help me to claim my Canadian tax entitlements?
These deductions can reduce your overall income tax liability because they cut down the amount of income you pay tax on.
What’s more, the Canadian Revenue Agency (CRA) has made the process for claiming home office tax relief even easier than before.
How does the new flat-rate method work?
The new temporary flat rate method will allow those who are eligible to claim a deduction of $2 for each day they worked at home in 2020 due to the pandemic.
The maximum an individual can claim using this method is $400 (200 days). Full-time and part-time workers are both eligible for tax relief.
Unlike the previous process, you will no longer be required to get a Form T2200 or Form T2200s signed and completed by your employer.
You also don’t need to determine the size of your workspace to calculate your claim for home office expenses in 2020. Also, you do not need to determine your expenses to calculate your claim.
The temporary flat rate method is used to claim home office expenses like electricity, rent, internet access fees, cell phone minutes and office supplies.
You will not be able to claim any other employment expenses.
This new flat-rate method can only be used for the 2020 tax year.
It’s also important to note that you can’t claim home office expenses for days that you were:
- On sick leave
- On vacation days
- On other leaves of absence
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What if multiple employees are working in the same home?
Any employee who meets the eligibility criteria can use the temporary flat rate method to claim their home office expenses, even if there is more than one worker working in the same home.
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How does the detailed method work?
If you want to claim the actual amounts you paid, you will need to use the detailed method. You will also need to separate those expenses between your personal use and your employment use.
The CRA has introduced a calculator and simplified versions of Form T777S and Form T2200S which are specifically designed to help with the calculation of the home office expenses that you are entitled to.
The CRA will accept electronic signatures on these forms (but only for the 2020 tax year) to reduce the necessity for employers and employees to meet in person.
With this method, you can claim the actual amounts you paid, supported by documents.
You will have to determine the use and size of your workspace to calculate your claim for work-space-in-the-home expenses.
All salaried employees and commission employees are able to claim:
- utility portion (water, heat and electricity) of your condominium fees (if you can calculate the portion of the fees you used within your personal unit using a reasonable basis
- maintenance and minor repair costs
- rent paid for an apartment or a house where you live
- home internet access fees
Commission employees can also claim:
- home insurance
- lease of a cell phone, tablet, laptop, computer, etc. These expenses should relate to earning commission income
- property taxes
Commission employees and salaried employees cannot claim:
- mortgage interest
- wall decorations
- capital expenses (replacing windows, flooring, etc)
- home internet connection fees
- principal mortgage payments
What are the eligibility requirements for the new temporary flat rate method?
Canadians who had to work from home more than 50% of the time for at least 4 consecutive weeks in 2020 due to the pandemic can claim the home office expenses deduction for 2020.
You should be claiming only home office expenses and not claiming any other employment expenses. Your employer must not reimburse you for all of your home office expenses.
Want to claim a tax refund from Canada?
What is Form T2200S?
You will need a Form T2200S (Declaration of Conditions of Employment for Working at Home During COVID-19) to be completed and signed by your employer if you worked from home in 2020 due to the COVID-19 pandemic.
And also if you are not using the temporary flat rate method. For example, if your work-from-expenses were more than $400.00.
With this form, your employer certifies that you worked from home during the pandemic and had to pay your own home office expenses.
What is Form T777S?
This Statement of Employment Expenses for Working at Home Due to COVID-19 (Form T777S) is used to calculate your claim for home office expenses.
Who can help me to claim my Canadian tax entitlements?
Dealing with tax papers and documents can be time-consuming and stressful. However, if you need help and if you want to ensure that you receive the maximum legal tax refund, you should apply with Taxback.
They will make a full assessment of all taxes you have paid and any reliefs or overpaid tax that is owed to you.
Their team will transfer your refund straight to your bank account anywhere in the world!
The average Canadian tax refund is $998, so it’s definitely worth claiming back what you’re owed!
Why apply with Taxback?
- Maximum Canadian tax refund guaranteed
- No complicated forms
- Simple online process
- Free online estimation with their tax return calculator
- 24/7 Live Chat support
Want to claim a tax refund from Canada?