Further to statements in the Fall Economic Statement, the Canada Revenue Agency has announced an administrative policy relating to the ability of employees to deduct home office expenses for the 2020 taxation year. The policy is temporary and made in order to accommodate employees who were required to work from home due to the COVID-19 pandemic during the 2020 tax year.
Employees who were required to work from home at least 50% of the time for at least four consecutive weeks during 2020 due to the pandemic may use the new “simplified process”. Under that process, employees do not need to calculate the size of their workspace, keep detailed supporting documents, or have their employer sign a Form T2200 (as would normally be required in order to claim home office expenses). This flat rate method is only available for 2020.
Employees eligible to use the simplified process can deduct $2 for each day they worked at home during 2020 due to COVID-19, up to a maximum of $400 (i.e. 200 working days). Vacation days or other leave days are not eligible for this deduction. Employees choosing to use the simplified process cannot claim any other type of employment expenses for the 2020 tax year. Employees claiming the flat rate deduction should complete Option 1 of new Form T777S.
Alternatively, employees who wish to deduct their actual home office expenses in 2020 can continue to use the detailed method from prior taxation years. The CRA has created simplified forms (T2200S and T777S) and an online calculator to assist employees in that process.