How Does Working Remotely Impact Your Income Tax Deductions?
With the onset of the COVID – 19 pandemic, numerous employers opted to allow their employees to work from home. Now that the restrictions have ended, some employers are offering their employees the opportunity to continue to work from home or in other cases offering a hybrid version that includes a certain number of days each week working in the office and the remainder working from home.
There are important challenges tied to this type of working model, and so there are administrative things that employers using this working model need to have in place.
An employer should have an established remote working policy so that there are no misunderstandings as to what the expectations are of their staff that are working from home. The employer should also make the CRA’s T2200 or T2200S forms available for their staff’s use.
When an employee works from home full-time or on a hybrid basis, they may be entitled to deduct a home office expense, which would not be allowed if they were physically working in their workplace. They may deduct this expense if:
· The employee works more than 50% of the time in their home office performing their employment duties.
· Or the home office is exclusively used for employment purposes on a regular and continuous basis for meeting with the company’s customers or other people they would normally meet with at their workplace while performing their employment duties.
The employee can then claim their home office expenses in one of two ways. They can make their claim using the “Detailed Method” or using the “Temporary Flat Rate Method”.
If employees will be using the “Temporary Flat Rate Method”, they do not need to determine their expenses to calculate their claim for home office expenses. The temporary flat rate method is used to claim home office expenses that you paid like rent, electricity, and home internet access fees, as well as office supplies like pens and paper, and cell phone minutes.
Should the employee choose to use the “Detailed Method”, then they are required to have a T2200 form or T2200S form (Declaration of Conditions of Employment for Working at Home Due to COVID – 19) signed by their employer. Either of these forms, requires the employer to certify the conditions of employment that are relevant for CRA to decide if the employee is entitled to deduct home office expenses.
To view all the eligible deductions of the detailed and temporary flat rate method through CRA, visit https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-22900-other-employment-expenses/work-space-home-expenses/expenses-can-claim.html
For more information on the CRA guidelines for claiming office expenses, contact one of our specialists at https://www.kliuaccounting.com/contact .