Sept. 21, 2021
When COVID-19 vaccines got the go-ahead from Health Canada, many assumed we’d be back in the office by June. That didn’t happen. And with many Canadians now approaching a full tax year of working from home, it’s reasonable to wonder whether you can write off some of the home-office expenses you’ve incurred.
The Canada Revenue Agency (CRA) says you can. In fact, the agency’s simplified the process with a couple new forms this year. Here’s a rundown of the rules and what you can claim when you file your taxes.
Who qualifies for a tax break?
Even if you occasionally went to your workplace, you still might be able to claim expenses.
To be eligible, the CRA says, you need to have spent at least 50 per cent of your hours working remotely during four consecutive weeks in 2021. That includes full-time and part-time hours.
Those who qualify can deduct a flat rate, or part of the costs of their workspace, like rent, electricity, heating and maintenance.
How do I apply for a tax break?
Typically, the CRA requires employees who are claiming this deduction to get their employer to fill out the T2200 form, which certifies that working from home is a condition of your employment. But a new form, T777S, can make claiming expenses easier.
Here are the two ways to claim expenses:
Temporary flat rate method
The T777S lets you make a claim without a signed form from your employer or even receipts from your expenses.
You can claim $2 for each day you worked remotely, up to a maximum of $400 — 200 working days — per individual. Sharing your home office with someone else? You can both make the maximum claim.
If you’ve had higher expenses, you might be able to write off more than what’s offered through the T777S. To do that, submit a claim with an employer-signed T2200S form (a shorter version of the T2200).
This lets you claim a portion of your home’s operating expenses, including heat, electricity, water, maintenance (like cleaning supplies and light bulbs), condo fees and even rent.
To calculate your claim, you need to determine how much of your home the office takes up. For easy math, if your home is 1,000 square feet and the office takes up 200 square feet, you can claim 20 per cent of your total housing expenses.
That doesn’t include expenses like office furniture and computer equipment. However, the CRA is allowing employers to reimburse employees for up to $500 worth of expenses tax-free. You’ll need to check with your company’s human resources department to verify their participation — and keep your receipts.
What expenses can I deduct with a T2200S form?
Here’s what you can and can’t claim:
Phone: Yes, you can deduct a portion of your cell phone plan with a T2200S under certain conditions. The plan itself needs to be reasonable, and you need to prove you used the claimed amount for work.
Internet: Yes, but, again, you can only claim the portion used exclusively for work.
Consumable supplies: Yes, you can deduct the total cost of things like pens, paper, stamps and ink cartridges that are used solely for work.
Furniture and tech: No, items like chairs, desks and monitors are permanent and thus considered capital expenses, which can’t be deducted by employees.
Mortgage payments, property taxes and insurance: No, and … it depends; your mortgage payment is not considered an expense. But employees who work on commission can claim property taxes and insurance.
Clothing: No, even if your job requires special clothing, you can’t deduct the costs.
If in doubt, CRA has a handy calculator to help you add up your claimable expenses based on your chosen filing method.
Don’t waste the savings
Once you file your 2021 tax return and collect your refund, be mindful of what you do with it. As we’ve learned from months of start and stop lockdowns, pandemic containment measures do strain your finances.