Big Increase in Number of Canadians Expected to Claim Tax Deduction for Working From Home During Pandemic

A speech therapist conducts a therapy session with a patient using the Zoom online conferencing platform on May 14, 2020. A large number of Canadians compelled to work from home during the pandemic lockdown are expected to claim a federal tax break for home offices. Hannah McKay/Associated Press

A big increase is expected in the number of Canadians who will claim a tax deduction for working from home during the pandemic, according to an expert on tax-related matters.

“I would say the number would have to be in the hundreds of thousands,” Armando Minicucci, a partner with the accounting firm Grant Thornton, told CBC

Since the COVID-19 pandemic lockdown began, millions of Canadians have been working from home.

The Canada Revenue Agency (CRA) says that “work-space-in-the-home expenses” are deductible when you meet one of the following conditions, and your employer has certified that working from home is a condition of your employment.

•       The workspace is where you work more than 50 percent of the time.
•       You use the workspace only to earn your employment income. You also have to use it on a regular and continuous basis for meeting clients, customers, or other people in the course of your employment duties.

According to the CRA, 174,210 Canadians benefited from the deduction for the 2018 tax season, claiming an average per person of $1,561. Eligible applicants can claim a reasonable portion of their household expenses to reduce their tax bills. However, mortgage interest or capital cost allowance is not deductible.

For employees to claim the deduction, employers must fill out the T2200 form, which certifies the applicant is working from home as a condition of employment. Without the form, the claim would be rejected, CRA said.

According to Statistics Canada’s June Labour Force Survey, 3.3 million Canadians have been working from home since the lockdown. The survey also shows that 400,000 Canadians returned to work in June. Some businesses have told their employees they can work from home indefinitely.

By September, those who started working from home in March will have worked half the year at home, which will potentially make them qualify for the tax reduction.

“We’re getting further and further along in this pandemic where a lot of employees are going to have exceeded the six-month mark, and in that situation they should qualify,” Minicucci said to CBC.

“But for those employees that have not worked the full six months or more at home, there’s a question with respect to whether or not they meet the eligibility criteria.”

Minicucci also suggested that tax experts should clarify if those who haven’t worked a full six months from home will be allowed to claim the deduction.

He noted that those who have worked from home for less than six months can claim the cost of many of the supplies they need in order to do their job.

“You’re looking at things like pens, paper, ink cartridges for your printer at home. Those are items that are consumed. Capital items, unfortunately, are not deductible. So if you buy a printer, not deductible. If you buy a laptop, not deductible. Those are capital items,” he said.

“But if you buy items that are being consumed during the course of performing your employment duties, they are deductible. The 50 percent criteria is not a condition in order to claim expenses for items that you consumed while performing your duties at home.”

The CRA and the federal finance department confirmed to CBC that they are not planning on changing any of the criteria on the “work-space-in-the-home expenses” deduction.