Personal Finance

Proposed Expansion of Home Office Expense Deduction

  • Last Updated:
  • Feb 28th, 2021 9:08 pm
[OP]
Member
Apr 29, 2012
363 posts
330 upvotes

Proposed Expansion of Home Office Expense Deduction

This may too early to discuss, budget has not officially passed. Feds are expanding Home Office Expense Deduction. In my attempt to read in between the lines it is not new money, it is more like doing away with the hassle of filing a T2200 form.

“To simplify the process for both taxpayers and businesses, the CRA will allow employees working from home in 2020 due to COVID-19 with modest expenses to claim up to $400, based on the amount of time working from home, without the need to track detailed expenses, and will generally not request that
people provide a signed form from their employers. This measure will help taxpayers access deductions they are entitled to receive and simplify the tax filing process. Further detail will be communicated by the CRA in the coming weeks.”

This seems ripe for abuse. So who’s going to go for it ?
Keep your eyes open in April to file.
Last edited by rfduser199 on Dec 1st, 2020 10:31 am, edited 1 time in total.
47 replies
Deal Addict
Mar 3, 2018
1974 posts
1979 upvotes
GTA
Essentially a $400 deduction or about a $120 tax saving for the average working taxpayer. This is insignificant compared to the $2000 a month CERB fiasco.
Deal Expert
May 30, 2005
45335 posts
5879 upvotes
Richmond Hill
$400 is a low amount compared to others that have also not required documentation. Ultimately CRA has always worked under an honour's system, they can and will audit you if they have reason to do so. Forget about the time it takes to prepare the documentation and just think about the amount of people CRA will need to hire to go through T2200's considering the amount of people filing for this deduction will be a good chunk of Canadians compared to previous years.
Deal Addict
Jan 21, 2018
4585 posts
4650 upvotes
Vancouver
Our company actually does allow employees to work from home, and a couple do, even before the pandemic. But after investigating, none of them bothered with the existing home office deductions, as they are too restrictive to claim anything significant. For example let's say you want to deduct the cost of your home office. You would have to set aside a separate room that is at least 90% dedicated to work use, and then you have to prorate expenses based on the square footage, so if it's 120 sq ft out of a 3000 sq ft house, you get to deduct 4% of certain home expenses. The amount has not been worth the paperwork hassle and the high chance of audit. We'll have to see if the upcoming proposals change that.
Deal Addict
User avatar
Dec 3, 2017
2702 posts
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K-W/Guelph
DaveTheDude wrote: Essentially a $400 deduction or about a $120 tax saving for the average working taxpayer. This is insignificant compared to the $2000 a month CERB fiasco.
CERB fiasco? There was some fraud but not that much. That Globe and Mail article that claimed $8 million was stolen from CERB was blatantly false.
Deal Addict
Mar 3, 2018
1974 posts
1979 upvotes
GTA
jacnel wrote: CERB fiasco? There was some fraud but not that much. That Globe and Mail article that claimed $8 million was stolen from CERB was blatantly false.
I would call the 213K Canadians who collected CERB improperly per CRA and now have to pay it back a fiasco.
Deal Addict
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Dec 3, 2017
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K-W/Guelph
DaveTheDude wrote: I would call the 213K Canadians who collected CERB improperly per CRA and now have to pay it back a fiasco.
213k people, in a country of 35 million? small cookies
Banned
Sep 14, 2020
180 posts
129 upvotes
Edmonton, AB
$400 seems like quite a low threshold... a fraction of utilities alone, even if no rent, should surpass that.
Deal Addict
Jul 23, 2002
4517 posts
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rodrickrod wrote: $400 seems like quite a low threshold... a fraction of utilities alone, even if no rent, should surpass that.
It's also a tax deduction, so it would only amount to $400 X your marginal tax rate.
Deal Addict
Sep 14, 2012
1427 posts
1008 upvotes
Montreal, QC
KillmeSlowly wrote: It seems like they are relaxing the rules due to COVID, the article below suggests that you don't really need documentation to claim it as long as it is under $400.

https://nationalpost.com/news/politics/ ... g-covid-19
I hope that they don't require a lot of documentation for the $400 beyond an employer specifying that the employee worked at home. I've been working from home 100% of the time (Monday to Friday) since March 2020 so me having to calculate how much electricity I used in the room and how much that room "costs", etc. will be a big hassle.
Deal Addict
Jul 15, 2009
2213 posts
1360 upvotes
lmcjipo wrote: I hope that they don't require a lot of documentation for the $400 beyond an employer specifying that the employee worked at home. I've been working from home 100% of the time (Monday to Friday) since March 2020 so me having to calculate how much electricity I used in the room and how much that room "costs", etc. will be a big hassle.
Here's what the actual government document says:

To simplify the process for both taxpayers and businesses, the CRA will allow employees working from home in 2020 due to COVID-19 with modest expenses to claim up to $400, based on the amount of time working from home, without the need to track detailed expenses, and will generally not request that people provide a signed form from their employers. This measure will help taxpayers access deductions they are entitled to receive and simplify the tax filing process. Further detail will be communicated by the CRA in the coming weeks.
[OP]
Member
Apr 29, 2012
363 posts
330 upvotes
CRA provided more details:

"Employees who worked from home more than 50% of the time over a period of a least four consecutive weeks in 2020 due to COVID-19 will now be eligible to claim the home office expenses deduction for 2020. The use of a shorter qualifying period will ensure that more employees can claim the deduction than would otherwise have been possible under longstanding practice.
A new temporary flat rate method will allow eligible employees to claim a deduction of $2 for each day they worked at home in that period, plus any other days they worked from home in 2020 due to COVID-19 up to a maximum of $400. Under this new method, employees will not have to get Form T2200 or Form T2200S completed and signed by their employer."

The also made a new T2200S form for more detailed expense claims. Looks like T2200S was made for covid.

Let us see, $2/day upto $400, March 13 to Dec 31, that is pretty easy to claim 200 working days.
Member
May 24, 2018
460 posts
291 upvotes
Ontario
Temporary flat rate method
  • Eligible employees claim $2 for each day you worked from home in 2020 due to the COVID-19 pandemic, up to a maximum of $400
  • Your employer is not required to complete and sign Form T2200
  • You are not required to keep documents to support your claim
(so I was told my new thread titled "Claim $2 for each day you worked from home in 2020 due to the COVID-19 pandemic" has been merged into this thread by the moderators)
Last edited by hwyc2007 on Dec 15th, 2020 6:08 pm, edited 2 times in total.
Sr. Member
Oct 17, 2008
586 posts
137 upvotes
Earth
Will this become something like CERB clawback after?

So many repeating themes...
Deal Addict
Jan 12, 2017
1295 posts
637 upvotes
Depending how big your house is, it can be worth doing. While $400 might be pretty reasonable for the GTA, its definitely a lowball for most people in Toronto or smaller towns where homes are older and smaller.

Anyone that's had to use conference calls in place of meetings can attest that it's unrealistic to share rooms with others unless your home is so small that you can't accommodate it.

Example:
Room Measurements vs House: (one time exercise)
Property Tax: (Photo of your bill or city account) - once a year (~$6k)
Gas: Log into your enbridge (or other) accnt - end of year (~$1k)
Hydro: Log into your account - end of year (~$1k)
Internet: Log into your bell/teksavvy/other accnt - end of year (~$750)
Phone: (~$600)

Ballpark Total: $9,350

120sqft room/3000sqft house - 4% = $374
120sqft room/1500sqft House - 8% = $748 (most homes this size would be older and less efficient than newer 3000sqft homes)
100sqft room/2bdrm 775sqft condo - 12.9% = $1,206
70sqft den/1+d 500sqft Condo - 14% = $1,309

Maintenance fees would increase your $'s, and I didn't make up any numbers for water and garbage.
Scote64 wrote: Our company actually does allow employees to work from home, and a couple do, even before the pandemic. But after investigating, none of them bothered with the existing home office deductions, as they are too restrictive to claim anything significant. For example let's say you want to deduct the cost of your home office. You would have to set aside a separate room that is at least 90% dedicated to work use, and then you have to prorate expenses based on the square footage, so if it's 120 sq ft out of a 3000 sq ft house, you get to deduct 4% of certain home expenses. The amount has not been worth the paperwork hassle and the high chance of audit. We'll have to see if the upcoming proposals change that.
Deal Addict
Oct 27, 2012
2251 posts
3559 upvotes
Toronto
Whoopdedoo, a $400 deduction. We'll be paying for this and CERB for a generation, but that's such a generous kickback! /s
Deal Addict
Jul 15, 2009
2213 posts
1360 upvotes
Chickennbeans wrote: Depending how big your house is, it can be worth doing. While $400 might be pretty reasonable for the GTA, its definitely a lowball for most people in Toronto or smaller towns where homes are older and smaller.

Anyone that's had to use conference calls in place of meetings can attest that it's unrealistic to share rooms with others unless your home is so small that you can't accommodate it.

Example:
Room Measurements vs House: (one time exercise)
Property Tax: (Photo of your bill or city account) - once a year (~$6k)
Gas: Log into your enbridge (or other) accnt - end of year (~$1k)
Hydro: Log into your account - end of year (~$1k)
Internet: Log into your bell/teksavvy/other accnt - end of year (~$750)
Phone: (~$600)

Ballpark Total: $9,350

120sqft room/3000sqft house - 4% = $374
120sqft room/1500sqft House - 8% = $748 (most homes this size would be older and less efficient than newer 3000sqft homes)
100sqft room/2bdrm 775sqft condo - 12.9% = $1,206
70sqft den/1+d 500sqft Condo - 14% = $1,309

Maintenance fees would increase your $'s, and I didn't make up any numbers for water and garbage.
Can't claim property tax unless working on commission, so your $9350 goes to $3350 and even your highest 14% amount goes from $1309 to $469.

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