In these trying times, many people are required to work from home.  Are you interested in what is deductible?  Learn what you need and how to maximize your tax deductions.

Category of workers

There are certain expenses employees may deduct based on which category they fall into as follows:

• Salaried Employee
• Commissioned Employee
• Self-Employed

It is not uncommon for a company to employ persons in each of the above categories. For example, the administrative assistant may be a salaried employee, the sales representative a commissioned employee, and the web designer an outside contractor who is self-employed.

Requirements:

The requirements must be supported by their employment contract and they must meet certain criteria:

• The employee must be required to work from home.
• The employee must bear the costs associated with working from home (reimbursements are not allowed in this situation)
• The employee must have a designated space exclusively for work and use it on a regular and continuous basis

While not required, it is advised that both the employer and employee complete a T2200 “Declaration of Conditions of Employment”. https://www.canada.ca/content/dam/cra-arc/formspubs/pbg/t2200/t2200-fill-19e.pdf  If your employer is unwilling to sign the form CRA will likely deny the deductions if audited.

The employee is also required to maintain all expense records should the CRA require proof of the deductions. Therefore, keep all invoices and receipts pertaining to amounts claimed.

Allowable Expenses

Below is a reference chart on which expenses can typically be deducted by a remote employee.  Only the portion of the expense as it relates to your home office can be deducted.  For example, if your home office is 20% of your total square footage of your house and you used it all year; allocate 20%. If it was only used for half the year, an additional pro-ration of 50% is necessary:

Allowable Expenses	Salaried Employee	Commissioned Employee	Self-employed
Rent	X	X	X
Heat	X	X	X
Hydro	X	X	X
Repairs & maintenance	X	X	X
Supplies	X	X	X
Property taxes		X	X
Insurance		X	X
Mortgage Interest			X
Capital Cost Allowance (CCA)			X

Note:

It is important to note that whether an employee is salaried, commissioned, or self-employed, they cannot create a loss through their home office deductions, meaning the deductions cannot exceed the related income reported. Employees are, however, able to carry forward any excess expenses to a future year’s personal tax return.

The following information should not be considered as tax advice. Please consult with a certified tax specialist for details regarding your tax reporting requirements.