Expenses and Allowances for Work from Home Employees

Posted in Blog, Expert Series
Mar 3, 2021

The workplace in 2020 looked quite different for a lot of companies. The shift to remote work became the norm for many, but is it here to stay? If it is, what are some things that employees need to consider when it comes to filing their taxes? Are there allowances or expenses they can write off? What do these include?

Invest Ottawa recently sat down with tax, legal and HR experts to get answers to some of these questions. They also offered some advice for employers as to what should be provided to their employees along with their T4s, so that they are properly equipped to file their 2020 taxes.

Host

Kara Eusebio – Senior Manager, Strategic Partnerships, Invest Ottawa

Panellists

Gavin Miranda, – Partner, Taxation Services, MNP

Jim Cruikshank – Human Capital Consulting, MNP

Simon Sigler – Lawyer, MDK Business Law

Here is the recording of this informative session which we will be breaking down into three quick, easy-to-digest articles.

Article 3 of Recovery Essentials: Labour Relations, Tax and People in the 2nd Wave

Work from Home Allowances

For the 2020 tax year, the CRA has announced that employees can claim up to $400 in expenses, based on the amount of time spent working from home. To streamline this process, employees will not be required to provide detailed expense reports on this year’s tax return. However, it is recommended that both employers and employees keep any expense documents for their own records.

Historically, the CRA had a work-from-home yearly deduction limit of $500. Initially, this was intended to cover computers and devices but has expanded to include desks, chairs and other supplies needed to work from home. It is expected that the 2020 deduction should cover similar equipment-related expenses. However, employees cannot claim these expenses if the employer paid for their equipment.

To alleviate expenses, employers may opt to lend out equipment not being used in the office, to their employees. If expenses exceed the deduction limit, employers may look at re-deploying some of the funds collected from subsidy programs, for equipment accommodation.

As for home-based office deductions, the CRA previously made this option available exclusively to employees whose contracts stated that their roles were primarily (at least 50%) WFH. The CRA is has revisited these conditions and has stated that verbal contracts including WFH clauses will be applicable for the 2020 tax year. Deductions employees can expect to write off include a portion of rent, property taxes, insurance, utilities, and some maintenance.

A T2200 form is required to claim work from home expenses. It is recommended that employers make employees aware of these forms and provide them along with T4s whenever possible.

Tips for Preparing Your Employees for Tax Time

• Provide the T2200 to your employees

• Consider contract updates for WFH structures


It can be challenging to know what resources and safeguards are in place to ensure a smooth transition to your next step. To learn more about the services and support provided by MNP and MDK Business Law, please contact:

Gavin Miranda, Regional Tax Leader, MNP, Eastern Ontario

[email protected]           

Phone number: 613-691-4224

Jim Cruickshank, Senior Manager, MNP, Human Resources Consulting

[email protected]

Phone number: 905-333-9888

R.Drew Kelsall, Business Lawyer, MDK Business Law

[email protected]

Phone number: 613-695-7800 ext.102

 

The article above is provided for general information only and does not constitute legal or tax advice. MDK Business Law Professional Corporation (“MDK”) and MNP LLP does not warrant or guarantee the quality, accuracy or completeness of any information. The article published is current as of the date of publication or date noted above, but should not be relied upon as accurate, timely or fit for any particular purpose.

Accessing our content, and receipt or transmissions of any communications to you or by MDK and MNP relating to the content does not create a lawyer-client relationship


For more content like this, see our Expert Series.

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