$400 tax deduction available for those who have been working from home during pandemic

Tax break for work at home

For many Canadians, homebound life has been a hallmark of the last nine months — wake up, make coffee and then stumble to your makeshift office in a kind of pandemic-themed version of the film Groundhog Day.

But whether you’re the homebody who savours avoiding the commute or a people-person suffering under the soul-crushing silence of a home office, chances are, your bills have gone up. 

For those not used to working from home, it might come as a surprise that Canadians can already deduct home office expenses come tax time. Now, with so many people working from spare rooms and kitchen tables this year, the federal government is looking to simplify the process.

According to the federal government’s 237-page Fall Economic Statement released Nov. 30, Canada Revenue Agency will allow employees working from home due to COVID-19 to claim up to $400 in “modest expenses.” 

“Millions of Canadians are unexpectedly working from home because of COVID-19. They are turning their bedrooms, basements and kitchens into offices, and taking on increased household expenses to do their jobs” reads the statement. “This measure will help taxpayers access deductions they are entitled to receive and simplify the tax filing process.”

According to the economic statement, the simplified flat rate for 2020 means Canadian employees can generally avoid the T2200 form, Declaration of Conditions of Employment, which an employer usually would fill out to tell the CRA that an employee has incurred mandatory expenses while working from home.

Further details on how the process is expected to function are expected in coming weeks, though current rules may be a sign of things to come.

Salaried employees working more than 50% of the time from home are currently eligible to deduct part of the costs related to their workspace — like electricity, heating or maintenance — as a work-space-in-the-home expense.

A previous condition to qualify requires a work space to only be used for work, and used on a regular and continuous basis for meeting clients or customers – but that can be done virtually.

Mortgage interest, property taxes, home insurance and capital cost allowance are not deductible. 

A clearer picture on the details is expected in the new year.

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