The pandemic has forced many Canadian employees to work from home. According to statistics, 32 percent of Canadian employees between 15 and 69 worked from home in 2021. That number is a significant deviation from the four percent that worked remotely in 2016.
Working from home naturally has challenges. For instance, employees must create home offices to work productively and effectively. Creating a home workspace requires purchasing the right equipment. The federal government understands the challenges of working remotely, which is why it announced it would be extending the 2021 Fall Economic Statement to the 2021 and 2022 tax years.
The 2021 Fall Economic Statement introduces numerous temporary home office expense rules that still apply in 2022. Let’s assess them in detail.
Tax Rules for Home Office Expenses Overview
Employees normally need two things to deduct home office expenses. Firstly, they must have a contract of employment that states they need a workspace in their home. Employers can attest to this requirement on T2200 forms. If you don’t have this form attested, you can’t claim home office expenses as deductibles.
In addition, you also need to meet one of two requirements. You must spend more than 50 percent of your working time at your workspace, or you must exclusively use the workspace for earning employment income and meeting clients.
CRA introduced these rules in 2020. They’ve not changed them since then.
Updated Home Office Expense Claim Process
CRA has changed some parts to make claiming home office expenses simpler and easier. CRA has relaxed the employer contract requirement. In addition, they’ve also provided a clear-cut definition of what working from home entails during the pandemic.
CRA has also allowed employees to use a temporary flat rate for deductibles in the 2021 tax year. Previously, employees had to use a detailed calculation method.
In addition, CRA has also introduced some new online tools, forms, and guides to help employees claim their temporary home office expense claims.
How Does the Temporary Flat Rate Method Work?
The temporary flat rate method simplifies the claims process. You’ll need to meet the following conditions to qualify for a deduction:
- You worked from home in 2021 because of the pandemic
- You spent more than 50 percent of your time working from home for at least four consecutive weeks during 2021.
- You claim home office expenses but refrain from claiming other employment deductibles.
- Your employer didn’t reimburse you for your home office expenses.
The temporary flat rate method enables employees to claim $2 per day. However, there’s a threshold of $500. That means you can’t claim more than $500 for home office expenses.
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