Tax Deductions for Working at Home

The End of the Office Era? Keep Good Records

Is the office era over? For many office workers, working from home became the new normal this spring. As such, some may be wondering if they are able to claim a tax deduction for home office expenses.

The Canada Revenue Agency (CRA) currently allows for a deduction in instances in which one of the following conditions is met:

  • The workspace is where you mainly do your work (more than 50 per cent of the time); or
  • You use the workspace only to earn employment income, and it is used on a regular and continuous basis for meeting clients, customers, or others in the course of your employment duties.

Deductible costs are based on the type of worker claiming the deduction: employees, commissioned salespeople, or self-employed workers. Each of these groups is entitled to deduct different expenses. Expenses generally include electricity, heating, maintenance and supplies. Property taxes and home insurance may be allowable for commissioned salespeople or self-employed individuals, and mortgage interest and capital cost allowance may be claimed for those self-employed. The portion that can be claimed is based on the area attributed to the home office, as a proportion of the total finished area of the home.

If individuals are not self-employed, in order to potentially deduct these expenses, your employer must complete CRA Form T2200: Declaration of Conditions of Employment. Any expenses reimbursed by the employer, such as internet or office supplies, cannot be claimed.

While the current CRA rules normally require that you spend more than 50 per cent of total work time in the home office during the tax year to claim deductions, some accounting professionals have indicated that there may be exceptions. Given the unprecedented circumstances in which people have been mandated to work from home, the CRA may consider cases on an individual basis, or may potentially make changes to its policies.1 As such, keep good records.

Over the foreseeable future, the 50 per cent threshold may be met if continued distancing efforts result in fewer workers returning to traditional office spaces. For detailed information, please consult the CRA or seek advice from an accounting professional.