New rules will make it easier for Canadians working from home to claim tax deductions: feds

Law360 Canada (December 16, 2020, 5:48 AM EST) -- The federal government has simplified the rules on claiming tax deductions for the millions of Canadians who have had to work from home as a result of the COVID-19 pandemic.

Revenue Minister Diane Lebouthillier outlined the plan Dec. 15. Employees who worked from home for more than 50 per cent of the time over a period of a least four consecutive weeks in 2020 due to COVID-19 will now be eligible to claim the home office expenses deduction for 2020. A new temporary flat rate method will allow eligible employees to claim a deduction of $2 for each day they worked at home in that period, plus any other days they worked from home in 2020 due to COVID-19, up to a maximum of $400.

Employees using the temporary method will not have to get forms from their employer confirming they had worked from home. The CRA has also also developed a calculator to help people to figure out their eligible expenses.

“The temporary flat rate method and the new user-friendly calculator will make it easier for more Canadians to claim the deductions and is one more demonstration of the CRA’s commitment to ensuring our tax system meets the needs of Canadians,” said Lebouthillier.

Employees with larger claims may continue to use the existing, more detailed method to calculate their deductions but must get a form from their employer and keep documents to support their claim. For people to opt to do this, the CRA has simplified the required forms and expanded the list of eligible expenses that can be claimed to include home Internet access fees.

The move was met with support from the business community. Peter Tzanetakis, president of the Canadian Payroll Association, said the announcement was a “win-win” for Canadian businesses and workers alike.

“It provides a fair and straightforward way for millions of workers, forced to work from home by the pandemic, to claim tax deductions for which they are eligible,” he said. “Waiving the employee’s need [for forms] will save employers over $194 million collectively, while being able to focus more intently on critical business needs.”

And Patrick Gill, senior director of tax and financial policy at the Canadian Chamber of Commerce, said the new rules are “the type of tax reform Canada needs.”

“Simplifying and streamlining the deduction for home office expenses means far less paperwork for Canadian employers and more money in Canadians’ pockets,” he said.

According to Statistics Canada, working from home continues to be an important adaptation to COVID-19 health risks, with 2.4 million Canadians who do not normally work from home doing so in October.

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