You can deduct certain home office expenses (popularly known as working from home tax deductions or workspace at home) if you are an employee in 2021. Due to Covid-19 pandemic, Canada Revenue Agency (CRA) has permitted to claim work from home expenses that will provide some tax relief for the employees in their personal tax return filings for 2021.

Eligibility Criteria for claiming home office expenses CRA

You must meet the eligibility criteria for claiming home office expense as per CRA. The eligibility criteria depend on method you claim.

There are two methods of claiming home office expenses:

Temporary flat rate method – you can deduct flat rate $ 2 per day you worked from home subject to maximum of $500 in 2021 & 2022 ($400 in 2020) which is equal to 250 days in 2021 and 2022 (200 days in 2020), potentially saving $102.50 for a marginal tax rate of 20.5%.

This method is used to claim home office expenses that you paid like rent, electricity and home internet access fees, as well as other office supplies like pens, paper or other stationery, and even cell phone minutes.

under this method, you must meet all the following conditions:

• Condition # 1 – You worked from home in 2020, 2021 & 2022 due to covid.
• Condition # 2 – for at least 4 consecutive weeks in year, you worked from home for over 50% of your time.
• Condition # 3 – You can claim either home office expense or other employment expense not both
• Condition # 4 – Your employer did not reimburse you home office expense.

Detailed Method – You can claim employment portion of “actual” amounts you paid while you work from home. that means, this method do not have any maximum limits, however, you must have completed and signed Form T2200S / Form T2200 from your employer.

You have to satisfy “all” conditions to claim home office expenses under this method:

• Condition # 1 - You worked from home in 2020, 2021 & 2022 due to covid, whether it is your choice or employers.
• Condition # 2 – for at least 4 consecutive weeks in year, you worked from home for over 50% of your time or your work space is only place you use to earn employment income.
• Condition # 3 - You paid your home office expenses that directly used in the work.
• Condition # 4 – You must have received signed copy of Form T2200 or T2200S (shorter version) - Declaration of conditions of employment

What is considered to be home office space

When you choose Temporary flat rate method is simple straight forward method in such case you can ignore the size or office space identification, however, complexity increases when you choose Detailed Method because it takes “actual” amount paid towards home office expense.

Two important consideration – Size of the home office (or workspace) and other is Hours of usage in terms of personal and employment.

Size of workspace varies with structure of home, the thumb rule is determining your reasonable length and breath size of table, chair, and storage (if any).

Usage or Hours per week you use the home office if you have designated area like room could be easy to calculate (in most cases 100%), but in case of shared space scenario (like dining room which could be used for personal and official purpose), you must determine number of hours you use the space divided by 168 hours (24 hours / day *7day week).

What expense you can claim as home office expense

Once you are clear about your eligibility for claiming home office expense, the next task is to identify eligible expense for purpose of calculations. As per CRA, the eligibility of expense depends on whether you are salaried employee or salary plus commission or commission employee. Commission income is considered as business income the expense list is more than salaried / salary plus commission employees.

	Expense
Salary, Salary plus commission	Electricity, water, heat, utilities, home internet access fee, minor repairs, rental payment.
Commission	In addition to above, home insurance, property taxes, lease of tools to earn income like cell phone, laptop, computer etc.
Both categories cannot claim	Mortgage principal & interest, home internet connection fees including lease for router, furniture, major repairs.

Restrictions to claim home office expense or work space in home -

• If you worked part of the year, then claim only for those part of year and not whole year.
• Have multiple income streams, then claim it against the income for which you spend those expense.
• If expense exceeds income, the excess of expense over income is carry forward to next year if you continue working for same employer.

Unless you are not sure about which route you are taking, it is advisable to have CPA Accountant to take care of your books and all tax planning matters. Here we can help, as CPA team each member is highly qualified to perform complex tax structures to guide the client as required. Contact us at 647-800-3097 / email us info@orientaccounting.ca today ! and talk to our CPA for free consultation