The Canada Revenue Agency (CRA) has expanded eligibility
and simplified the compliance requirements related to home
office expenses for employees working from home due to
COVID-19. Home office expenses include work-space-in-thehome as well as certain office supplies and phone expenses
(See Table 1). Both salaried employees and employees earning
employment income in the form of commissions1
working
from home due to COVID-19 may be eligible to claim these
expenses as deductions on their 2020 T1 Income Tax and
Benefit returns.


The new temporary flat rate method allows a deduction of
$2 per day to a maximum of $400 with respect to home office
expenses for employees who, for at least four consecutive
weeks in 2020, worked from home due to COVID-19 more
than 50 per cent of the time. The employee may not claim
any other type of employment expenses, such as parking and
automobile expenses. Employees choosing to deduct home
office expenses using this method are not required to maintain
receipts or other supporting documents, or determine the
size of the work-space-in-the-home. Employment contracts
do not need to reference the requirement to work from
home, and the employer does not need to complete CRA
Form T2200S. The employee simply completes option 1 of the
new Form T777S, claims the deduction calculated on line 9939
of Form T777S onto line 22900 of their 2020 T1 and attaches
the form to their 2020 T1. Under this method, a workday
includes days worked full-time, part-time or over-time hours
from home, but does not include vacation days, sick days,
days on leave or statutory holidays.

The detailed method is available for employees who worked
from home in 2020 more than 50 per cent of the time due
to COVID-19 for at least four weeks, but who wish to claim
the actual amount of home office expenses they paid for
and/or other types of employment expenses. It’s important
to note that employer requirements to work from home
in 2020 do not have to be part of employment contracts
and may be authorized through other written agreements,
or even a verbal agreement. In cases where an employee
is required to pay only home office expenses, chooses the
detailed method and worked from home in 2020 only due
to COVID-19, the employer must complete, sign and provide
the employee with a simplified Form T2200S. If the employee
is also required to pay for other employment expenses, the
employer must provide the employee with a completed and
signed Form T2200. Forms T2200/T2200S do not need to be
submitted to the CRA but must be kept on file. Employees
must keep their receipts and determine the size of their
work-space-in-the-home, and then complete the simplified
Form T777S (Option 2) and attach it to their 2020 T1. Employees
claiming other employment expenses must complete
Form T777 and attach it to their 2020 T1.

Employees can be partially reimbursed for some home office
expenses and still claim the $2-per-day deduction under the
temporary flat rate method. Under the detailed method,
employees cannot claim expenses for which they were
reimbursed, however, they may still claim expenses for which
they were not reimbursed or received an allowance for.
For 2020, home office expense claims are available both to
employees who chose to work from home due to COVID-19
– where their employer gave them the choice to do so – and
employees required by their employer to work from home
due to COVID-19 or otherwise.
The new rules do not impact self-employed individuals
claiming business-use-of-home expenses using Form 2125.

Eligible expenses
Expenses that are eligible to be claimed include:
▪ rent paid (if you are renting your home)
▪ utilities (e.g. heat, electricity, water)
▪ utilities portion of condominium fees
▪ maintenance (e.g. minor repairs, cleaning supplies,
light bulbs, paint) for the workspace or common
areas needed to use the workspace
▪ home internet access fees (cost of plan must
be reasonable)
▪ office supplies (folders, highlighters, envelopes, ink
cartridges, toner, notebooks, paper clips, binder
clips, pens and pencils, specialty paper, stamps,
postage, stationery, sticky notes, etc.)
Eligible phone expenses include:
▪ employment use of a basic cell phone service plan
(reasonable data and minutes)
▪ long distance calls for employment purposes from
either a cell phone or land line
Employees who earn commission income can also claim:
▪ property taxes
▪ home insurance
▪ lease of a cell phone, computer, laptop, tablet, fax
machine, and such that reasonably relate to earning
commission income

Expenses that are not eligible to be claimed include:
▪ capital cost allowance
▪ mortgage interest
▪ principal mortgage payments
▪ capital expenses (e.g. renovation costs such as
replacing windows, flooring, furnace)
▪ internet connection fees and portion of internet
plan costs related to lease of modem or router
▪ office equipment (printer, fax machine, briefcase,
laptop case or bag, calculator, etc.)
▪ monthly basic rate for a landline telephone
▪ cell phone connection or license fees
▪ purchase of electronic devices (computer, laptop,
tablet, fax machine, etc.)
▪ computer accessories (monitor, mouse, keyboard,
headset, microphone, speakers, webcam, etc.)
▪ other electronics (television, smart speaker, voice
assistant technology, etc.)
▪ furniture (desk, chairs, etc.)


Note: Neither salaried employees nor employees who
earn commission income can use home office expense
claims to create or increase loss from employment

Please note that for 2020, the CRA has indicated that
they will not consider a taxable benefit to apply where
an employer reimburses an employee for up to $500 of
expenses like computer equipment and office furniture, and
certain parking and travel expenses related to increased
commuting costs incurred by the employee due to COVID-19.
Taxpayers should speak to their tax advisors to confirm their
eligibility and optimal approach to claiming home office
expenses and access to non-taxable benefits for 2020. For
additional information on home office expenses, view here.
For additional information on changes to taxable benefits for
2020.

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Published: February 1, 2021