Claiming Home Office Expenses in 2020

Walter Harder

In 2020, a large number of taxpayers are working from home due to workplace restrictions imposed by governments due to the COVID-19 pandemic. The current requirements for claiming home office expenses are very strict, and the reporting is rather cumbersome.  But CRA is working on a solution.

Under the current rules, home office expenses for an employee are only deductible if they are required by their employment contract, not paid by the employer, and if the employer specifies the details of the agreement on form T2200 Declaration of Conditions of Employment. This form is complex and, as many tax practitioners know, is often completed incorrectly, if at all, by the employer.

Because of the realities of 2020, where many employees are working from home with no change in their employment conditions, changes have to be made, or the employee’s home office costs will not be deductible.

With this in mind, CRA consulted with employers and members of the tax community. At that consultation, they presented a draft T2200 Short form for discussion. This short form was designed specifically for employees working from home during the pandemic.

If adopted, this form would allow employers to attest to a verbal agreement between the employer and the employee that they would work from home and pay their own expenses. The form also stipulates that the employee must have worked from home for more than 50% of the time for a period (or periods) of at least four weeks.

During the consultations, it was suggested that a simpler approach would be to adjust the T4 slip for 2020 to add a tick box to indicate that the employee was required to work from home and another box in the Other Information area to indicate the amount of any reimbursement not included in income. 

The T4 slip for 2020 has just been released (see EverGreen Explanatory Notes), but it contains no revisions related to home workspace expenses.

Stay tuned to Knowledge Bureau Report.  We’ll publish further updates when they become available. 

For full details, attend the Virtual CE Summit, Advanced Personal Tax Update in January 2021. In the meantime, it’s a great time to enhance your credentials and train your team. The DFA-Tax Services Specialist™ Designation program is a great place to start.