Written by Robin Taub
Monday, April 4th, 2022
Since COVID-19 hit, many employees have been working from home: from their kitchens, bedrooms, living and dining rooms. As a result, the Canada Revenue Agency (CRA) created a new, simplified, temporary flat rate method for claiming the deduction for home office expenses.
Initially created for the 2020 tax year, it has been extended to apply for the 2021 and 2022 tax years as well. A deduction reduces your net income for tax purposes, which means you pay less tax.
You may be eligible for the temporary flat rate method if you worked more than 50% of the time from home for a period of at least four consecutive weeks in 2021.
New Temporary Flat Rate Method
You may be able to claim $2 for each day you worked from home during that period (of at least four consecutive weeks) plus any additional days you worked at home in 2021 due to COVID-19. The new temporary flat rate method is subject to a maximum, which has increased to $500 per individual for 2021 (250 working days, up from 200).
Each individual working from home who meets these criteria can use the temporary flat rate method. Multiple people working from the same home can each make a claim.
What Counts as a Work Day?
Days that you worked full-time or part-time hours from home count as work days. Days off, vacation days, sick days or other days on leave don't count.
What Documentation Do You Need for the Work from Home Tax Credit in Canada
You don't need to keep supporting documents, calculate the size of your workspace or get your employer to complete and sign Form T2200S or Form T2200 if you use the temporary flat rate method.
You can find answers to frequently asked questions about this new, simplified method, on the CRA's website.
What If I Want to Claim the Actual Amounts I Paid?
Instead of the new temporary flat rate method, if you're eligible, you may use the detailed (or traditional) method to claim the home office expenses you paid for the period you worked from home.
You may be eligible if you meet certain criteria, including:
- You worked from home in 2021 due to the COVID-19 pandemic, including the situation where you were provided with a choice to work from home.
- You worked more than 50% of the time from home for a period of at least four consecutive weeks in 2021.
- You have a completed and signed Form T2200S or Form T2200 from your employer. The CRA will accept an electronic signature on these forms.
- The expenses are used directly in your work during the period.
What Can I Claim Under the Detailed Method?
To find out what qualifies, check the CRA's list of eligible expenses,
which includes electricity, heat, water, maintenance and minor repairs, rent and some office supplies. (It's worth double checking that you're not including ineligible expenses like mortgage payments and certain office supplies, which are specifically disallowed. And if you're a commission employee, you may be entitled to claim additional expenses.) It's also worth noting that home internet access fees are an eligible expense in 2021.
There is a requirement to keep supporting documents for the expenses incurred if the detailed method is chosen.
How Do I Calculate My Expenses Under the Detailed Method?
The detailed method is more complicated, since you need to determine the size of your home and work space in order to calculate your home office expense deduction. Consider getting guidance by using the CRA's calculator or speaking with your tax advisor.
Where Do I Deduct Home Office Expenses on My Tax Return?
Generally, a simplified form T777S should be submitted with your 2021 personal income tax return, if you claim only home office expenses using the simplified or detailed method. Form T777 should be used if you claim other employment expenses.
Work-space-in-the-home expenses are limited to the amount of net employment income you earn. This means you can't use home work space expenses to create or increase a loss from employment. If you can't deduct all your work space expenses in the year, you can carry them forward and deduct them the following year, as long as you're reporting income from the same employer.
Note Important Deadlines
- For individuals (other than trusts), the deadline for filing your return is normally April 30, but since that falls on a Saturday this year, it's the next business day, May 2, 2022. All taxes owing are also due on this date.
- If you're self-employed, the filing deadline is June 15, 2022, however all taxes owing must be paid by May 2, 2022.