New Simplified Home Office Expense Income Tax Deduction Uses $2 Daily Flat Rate

OTTAWA — In anticipation of a surge in home office expense claims, the Canada Revenue Agency (CRA) announced details Wednesday about its new, simplified “temporary flat rate” criteria to determine how much money Canadians are eligible for in tax deductions . 

Millions of Canadians who have found themselves suddenly working from home because of the coronavirus pandemic are eligible for up to $400 in income tax deductions. The Liberal government announced the measure in the fall economic statement last month.

Workers will have the option of claiming home office expenses through a detailed process that pre-existed the pandemic — or through a new, simplified route that requires minimal documentation.

Under this new, simplified formula, workers who have not had their expenses reimbursed by employers are eligible to claim $2 per day for each day they worked from home in 2020. 

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Workers must have worked at least 50 per cent of their time from home for at least four consecutive weeks. All that’s required for this simplified process is a determination of how many days were worked at home. 

No signature on Form T2200 is required, unlike the detailed claims process. The detailed process also requires more extensive documentation in order to claim expenses, including utilities, internet, and rent for some employees . 

Additionally, employees who choose the simplified process are not required to calculate the size of their workspaces nor keep documents to support their tax deduction claim.  

Senior CRA officials told reporters at a technical briefing Wednesday that approximately 750,000 people claimed home office expenses in their tax returns in 2019. 

A senior official at the briefing not authorized to speak publicly about how the eligibility amounts were determined, said based on previous years, the $2 per day calculation was determined to be “fair” by the CRA and finance department.

Since mid-March, concerns about community transmission of COVID-19 have forced millions of people across the country to accommodate interim and long-term home office setups.

According to Statistics Canada, approximately 4.7 million Canadians who did not usually work from home before the pandemic found themselves working from home in the last week of March.