In March 2020, we saw an unprecedented number of Canadians suddenly and swiftly transition to working-from-home due to the COVID-19 pandemic. As we approach the six-month point in September, employers may start receiving more inquiries on whether their employees can claim tax deductions for working from home. These deductions are called Work Space in Home deductions and are found in section 8(13) of the Income Tax Act.
To qualify, the employer must provide a Declaration of Conditions of Employment (T2200 form) to the employee, confirming that the expenses and the home work space are conditions of the job. Next, the employee must meet one of the two tests:
- the home work space is where the individual principally (50%+) performs their duties of their office or employment; OR
- during the relevant period, the home work space is used exclusively for work AND it is used on a regular and continuous basis for meeting customers in the ordinary course of performing their duties of their office or employment.
The second test is difficult to meet because, in the past, the CRA has taken the position the videoconferencing does not qualify as a "meeting". We are keeping up with CRA announcements to see if there will be leniency but, as of this date, they have not changed their position. However, with September approaching, more employees may start to become eligible under the first test since they will have spent over 50% of their working hours in their home office in the tax year.
For more details on employees deductions and expenses, see our article here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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