Personal Tax Deductions: EMPLOYEES WORKING FROM HOME DURING COVID-19

Due to the COVID-19 pandemic, many employees worked
from home during a portion of 2020. On December 15,
2020, CRA released guidance on two new options
available for employees claiming expenses related to working
from home on their personal tax return.

While this will clearly impact an
employee’s personal tax filing, it
should also be considered by
employers. A key question
employers need to answer is
whether they should provide an
employer certification in respect of
these employees. If so, they should
consider what certification should be issued, and how they
should be completed in an efficient, correct, and complete
manner.

To help address these issues, we must understand the
claims that employees can make.

Temporary flat rate method – no employer certification required

Employees can claim $2/day, to a maximum of $400, for
days worked from home either full or part-time. This is
available if:
– the employee worked from home more than 50% of the
time for a period of at least four consecutive weeks in
2020 due to the COVID-19 pandemic;
– the employee is not claiming any other employment
expenses; and
– the employer did not reimburse all of the employee’s
home office expenses.
Detailed method – employer certification required
As an alternative to the above, eligible employees may also
use a detailed method to claim reasonable amounts paid
for expenses incurred related to working from home.
This is a more complex option which requires that the
employee retain detailed support (receipts and invoices) for
the expenses, as well as obtain an employer certification.
CRA allows for a simpler certification (T2200S Declaration
of Conditions of Employment for Working at Home Due to
COVID-19) if there are no other employment expenses
being claimed, otherwise, the more extensive T2200
(Declaration of Conditions of Employment) must be obtained.

For expenses related to working from home to be deductible
under this method, one of the following has to be met:
– the home was where the individual mainly (more than
50% of the time) did their work for a period of at least
four consecutive weeks; or
– the individual used the space exclusively to earn
income, and used it on a regular and ongoing basis
for meeting clients, customers or other people in
respect of the employment.
If one of these tests are met, even for a portion of the year,
a reasonable claim can be made. Such eligible expenses
include amounts paid for rent, utilities, internet access
fees and office supplies.
Issues for employers
While no certification is required for an employee to claim
the temporary flat rate method, a certification (T2200S or
T2200) is required for those using the detailed method.
T2200
The T2200 is the existing and extensive form required if an
employee is claiming expenses beyond those simply related
to working from home.
This document requires the employer to answer multiple
detailed questions, many of which require additional
information.

T2200S
The T2200S is a much simpler form as compared to the
historical T2200. There are three simple questions the
employer will need to answer on the form for each
employee:
– Did this employee work from home due to COVID-19?
– Did you or will you reimburse this employee for any of
their home office expenses? The amount of any
reimbursement or allowance is not required to be
included on the T2200S.
– Was the amount included on this employee's T4 slip?
The form also requires the employer to certify “that this
employee worked from home in 2020 due to COVID-19, and
was required to pay some or all their (sic) own home office
expenses used directly in their work while carrying out their
duties of employment during that period.”

ACTION ITEM: Consider whether you will provide
employees with a T2200, T2200S, or no certification.

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