The collective shift to home work has meant that affected employees have had to purchase certain essential goods and services in order to continue to perform their regular duties. With that in mind, employees in Canada who have been required to work from home may be able to claim back the cost of doing so, deducting certain expenses from their tax liability using Form T2200, which must be authorised and signed by their employer.
To manage the increased number of T2200 submissions generated by Covid-19 work-from-home measures, the Canadian government recently adjusted the rules for completing the form in 2020. If you are an employer in Canada, it’s important that you understand how to manage your employees’ work from home claims and how Form T2200 should be submitted to the taxman.
Who can claim?
In order to be eligible for work-from-home expenses, employees must be contractually required to work from home more than 50% of the time or use their home office exclusively for work activities and meet clients there regularly. Additionally, the expenses that employees claim must be required by their employment contract.
Work from home expenses that can be claimed are as follows:
- Home expenses including heat, power, water, maintenance and rent. The amount of home expenses claimed must relate to how much of a home is used for work.
- Phone expenses proportional to the amount of time a phone is used for work.
- Internet expenses proportional to the amount of time an internet plan is used for work.
- Consumable supplies such as pens, paper, and ink that are solely used for work.
Furniture, technology, and clothing cannot be claimed under work from home expenses Similarly, mortgages, property taxes and insurance cannot be claimed.
How to Claim Work from Home Expenses: Simplified Form T2200
Under normal circumstances, to claim their workspace-in-the-home expenses deduction, employees must meet the eligibility criteria and submit Form T2200, signed by their employers, to the Canada Revenue Agency (CRA). However, since an increased number of employees are working from home for the first time in 2020, the T2200 submission process may be unfamiliar to many, while employers may face an administrative challenge in signing forms for each individual employee.
With that in mind, to reduce the compliance burden on employers and employees, the Canadian government has simplified the Form T2200 submission process: under the new rules, employers will not be required to sign their employees’ Form T2200 for employees making expense claims up to $400.
Form T2200 Short
The new rule follows a consultation process between the CRA and the Canadian government which resulted in a number of suggestions to simplify Form T2200.
Accordingly, the removal of the employer-signature requirement for claims below $400 accompanies the release of a draft Form T2200 Short which is intended to make the entire submission process quicker for the millions of employees who are making expense claims for the Covid-19 restriction period.
Learn more about coronavirus support measures for employers and employees on activpayroll’s blog and latest news page. For more insight and information on Canadian tax and social security measures read our Canada Global Insight Guide.