For thousands of British Columbian still employed during the pandemic, do you wonder what work-in-the-home and related office expenses can be deducted as employment expenses. CRA rules are quite specific (T4044 Employment Expenses), but exceptional times may require special treatment.

  1. Your employer needs to complete and sign a declaration confirming it was a condition of employment for the employees to pay their expenses while carrying out the duties of employment.
  2. It entails the employment service agreement must include clause(s) to that effect. Although CRA noted there is no requirement the contractual term be in writing, the employee has to demonstrate that there was an implied requirement that the expenses be incurred and were necessary. Otherwise, the employees are not entitled to claim the employment expenses.
  3. CRA is working on a simplified version of declaration which will be released soon.
  4. To allow home office expenses to incur, one of the following has to be met:
    1. The home is where the employee principally (more than 50% of the time) does their work; or
    2. The employee uses the space exclusively to earn employment income, and it is used on a regular and ongoing basis for meeting clients, customers or other people in the course of performing employment duties
  5. Employee cannot deduct the monthly access fees for home internet service or cell phone airtime, unless it can be demonstrated that cost of service plan is reasonable, directly consumed in relation to employment duties and apportioned between employment and personal use on a reasonable basis.
  6. Basic rate for a telephone that is not used exclusively for employment purpose is not deductible.
  7. Salaried employee can deduct portion of costs of supplies consumed such as electricity, heating and maintenance. While commissioned salesperson can deduct broader deductions on property tax and home insurance. Both salaried and commissioned employee cannot deduct mortgage interest and capital cost allowance as these are capital costs.
  8. Generally, traveling expense from home to corporate office is not deductible, unless it can be argued and “established that when the work circumstances reasonably require that the worker have an office, and an office is not provided by the employer, then the worker can locate the required office somewhere including in their home and have it regarded as an employment location”.
  9. CRA administrative ruled that, in the COVID-19 context, it is willing to treat the reimbursement of not exceeding $500 for the purchase of personal computer equipment that is mainly for the benefit of the employer as not being taxable.
  10. CRA has now indicated that, although there are no current plans to increase the $500 threshold, it will be extended to office furniture or other home office items and will not be limited to computers.
  11. To avoid employee’s income inclusion for any amount exceeding $500, the employer may simply purchase the personal computer equipment for the exclusively use of employment.
  12. The employee still needs to keep a detailed list of expenses, with supporting receipts, and be able to defend the claim as reasonable if it is challenged.


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