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Deducting your home office expenses will now take more time. This article answers 4 key questions ahead of tax season.
For those continuing to work from home post-pandemic, your home office expenses may be tax deductible. For the 2020-2022 tax years, Canada Revenue Agency (CRA) allowed for the use of a flat rate method to claim home office expenses. Unfortunately, for 2023 this method is no longer available, but the detailed method remains. As a result, it may take you a bit more time to claim your work from home expenses on your 2023 personal tax return than in recent years.
Who can claim home office expenses?
If you can answer “yes” to all of the following four eligibility criteria questions for 2023, you can claim home office expenses.
Question 1: Did your employer require you to work from home?
Having a written agreement in place that shows you are required to work from home should satisfy this requirement. However, while your employer may not have required you to work from home, if you have entered into a “formal telework arrangement” (the CRA has not defined) with them, you will be considered to have been required to work from home.
Question 2: Were you required to pay for expenses directly related to your workspace in your home?
To claim a deduction for the items in the chart below, your working from home agreement must require that you pay for them. Commissioned employees can claim a few extra items that non-commissioned employees cannot.
Expense |
Employees can claim |
Commission employees can claim |
Cannot claim |
|---|---|---|---|
Electricity |
✔ | ✔ | |
Heat |
✔ | ✔ | |
Water |
✔ | ✔ | |
Utility portion of condominium fees |
✔ | ✔ | |
Home internet access fees |
✔ | ✔ | |
Maintenance and minor repair costs, e.g., repainting |
✔ | ✔ | |
Rent paid |
✔ | ✔ | |
Home insurance |
✔ | ||
Property taxes |
✔ | ||
Lease of a cell phone, computer, laptop, etc. |
✔ | ||
Mortgage interest |
✔ | ||
Principal mortgage payments |
✔ | ||
Home internet connection fees |
✔ | ||
Furniture |
✔ | ||
Capital expenses such as flooring, furnace, etc. |
✔ | ||
Wall decorations |
✔ |
The deduction for home office expenses is driven by the size of your home office relative to the size of your entire home. For example, if your home office is 100 square feet and your home totals 2,000 square feet, you could deduct 5% of your expenses. The deduction cannot exceed your employment income, but any excess can be carried forward and deducted in a future year, if you work at the same employer.
If you earn commission income and your expenses exceed your commission income or similar amounts you received, you may be able to use another method. Speak with a qualified tax advisor to understand your options.
You may also be required to pay for other items, such as office supplies or certain phone expenses. If so, you may be able to claim those expenses, as well. These expenses are not prorated by the size of your workspace.
Question 3: Did you work from home more than 50% of the time for a period of at least four consecutive weeks in the year?
Generally, if you work from home at least three days in a week and had done so for at least four consecutive weeks, you are eligible to claim home office expenses for the time that you worked from home. For example, if you worked from home three days a week for the first six months of the year, you can claim home office expenses incurred in that period.
Part-time employees can qualify based on their normal work schedule. For example, if you normally work three days a week, working at home for at least two days each week would allow you to qualify.
Question 4: Do you have a completed and signed Form T2200 from your employer?
You must obtain a completed and signed Form T2200 Declaration of Condition of Employment from your employer. Electronic signatures will be accepted.
Claiming your expenses – next steps
If you meet the criteria above, here’s a list of some things that you’ll need to do:
CRA’s website is a good resource and consider consulting with a qualified tax advisor.
Information contained in this article is provided for information purposes only. Its not intended to provide or be a substitute for professional, financial, tax, insurance, investment, legal or accounting advice and should not be relied upon in that regard. It also does not constitute a specific offer to buy and/or sell securities. You should always consult your financial advisor or tax specialist before undertaking any of the strategies discussed in this article to ensure that all elements and your personal circumstances are taken into consideration in developing your individual financial plan. Information contained in this article has been compiled from sources believed to be reliable, but no representation or warranty, express or implied, is made with respect to its timeliness or accuracy and SLGI Asset Management Inc. disclaims any responsibility for any loss that may arise as a result of the use of the strategies discussed.
