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Tax tips for employees who work from home during COVID-19

Home Office Expences

If you are working from home, you are eligible to deduct home office expenses, if you meet at least one of the following conditions:

  • The home office space is where the employee principally does the work (meaning more than 50% of the time), or
  • The home office space is used only to earn employment income. The employee must also use it on a regular and continuous basis for meeting clients, customers or other people in the course of the employment duties.

Looking at the first condition, you would have to work from the home office for at least six months to be eligible. However, if your employer requires you to work from home for 5 months during the COVID-19 crisis, you should be able to take the position that you are entitled to claim the home office expenses for these 5 months. The key is that you work from home more than 50% of the time during the 5 month period.

The second condition is tough to meet especially during the current pandemic. The tax department insists that you have to have a face-to-face meeting with the customer. So far CRA has not announced that it would allow telephone calls or Zoom meetings.

If you are a salaried employee you can deduct such costs as electricity, heating, and home maintenance relating to your workspace. If your remuneration is in the form of commission income, you can also deduct the share of expenses relating to property taxes and home insurance.

To allocate the expenses to the workspace, you can take the percentage based on the square footage of the workspace as a percentage of the total square footage for the home. Alternatively, you can allocate the expenses based on the number of rooms used for the workspace.

In order to deduct these home office expenses on your tax return, you must file with your tax return Form T2200. On this form, your employer certifies that the employee was required to use a portion of the home for work-related purposes, and that you were not reimbursed for these expenses.

For this year only, there is one important exception. If your employer reimburses you to a maximum of $500 for the purchase of personal computer equipment that enables you to work from home, then the reimbursement will not be considered a taxable benefit to you.

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