Updated: Feb 7
Like many Canadians, we all had to spend a great deal of time working from home in 2021. And as the year wraps you you may be wondering whether there will be any tax deductions available for employees who WHF (worked from home). If you are an employer you should be curious to know if you are expected to provide any forms for your employees. Also if you are a business owner of a Sole Proprietorship business in 2021 this article may apply to you as well.
Temporary Flat Method is back!
This method was supposed to come in handy for 2020 and is capped at $400. With all the lockdowns, however, this methodology is here to stay in 2021. You can use this methodology if you worked from home more than 50% of the time in 2021.
Wondering if you meet this threshold: In 2021 there were 261 business working days (number of days after excluding ten public holidays). Consider subtracting your vacation days from your calculation to arrive at a true 50%. Remember that a Working day is considered any day that you worked full time or part-time hours.
The maximum claim per individual under this method is $500.
Aside from calculation the number of days you WFH this method is pretty simple because there is:
No need to calculate workspace details
No need to keep supporting documentation
No T2200 (Declaration of Conditions of Employment) is required from your employer.
For larger claims use the Detailed Method
If you had to make a larger expense to work from home in 2021 you should talk to your employer. Your employer will need to fill out a T2200 form that will specify what expenses you incurred and whether there was any reimbursement back to you. As well, you will have to keep support documents in case of a CRA audit. Sole Proprietors may be better off using the Detailed Method since you probably had a larger list of expenses claim and higher ticket items as part of your regular tax filing practices.
Lastly, sole Proprietors may be better off using the Detailed Method since you probably had a larger list of expenses claim and higher ticket items as part of your regular tax filing practices.
What if I'm sharing WFH workspace with my partner and we have to use the Detailed Method?
In the event that both of you met the criteria, here is you calculate workspace when both of you work from home.
1. Expenses you can claim: The CRA generally allows some flexibility in letting you and your spouse decide how to share eligible work-space-in-the-home expenses, as long as you meet all of these requirements:
you or your spouse must have paid the expenses yourselves
you reduce the amount of any expense by the amount of any reimbursement that either you or your spouse received for the expense
the expense is claimed as a deduction only once
For example, John and Jane are common-law partners. They paid $1,400 monthly for rent. Either John or Jane (but not both) can claim the full $1,400, or they can share the total of $1,400 as they want (50/50, 70/30, 40/60, etc.).
2. Employment-use amount of those expenses This is determined by multiplying the eligible expenses from 1) by your employment-use percentage of the workspace. Your employment-use percentage of the workspace depends on whether you and your spouse used a single workspace or worked in different workspaces in the home. For more information, see Determine your work space use.
We will provide updates to this blog as the tax season develops. Until then, let us know if you have any questions. Follow us at @blossomcpa on IG. And subscribe to our newsletter on our website www.blossomcpa.ca.