There are many people who have started a business and work from home. These business individuals are usually aware of what they can use for tax deductions for their business. Although there are still a lot of people that are unclear about this as the tax rules can be complex. The same can be said for those who work for a company but work from home.
The CRA has come out with a new tax deduction that everyone should be aware of even it they don’t operate a business from home.
Working From Home
When the COVID-19 pandemic hit it took everyone by surprise. It soon led to a shutdown in many parts of Canada which immediately caused companies to shut down. Although it was temporary it caused havoc for the companies and their employees.
A temporary solution to help the company to keep operating was to have their employees work from home if this was feasible. This meant making some big changes in the home environment for those that were able to do this. This was something that most were willing to do because it allowed them to still bring in a paycheck.
Compensation
The Canadian government realized that the changes that had to be made by these now at home workers could be placing an extra burden on them. To help compensate for this the government has approved a new tax deduction. This is up to a $400 claim that can be made for modest expenses that are as a result of having to work from home for an employer.
Common Expenses Realized
For those who were asked to work from home many were caught off guard and were not properly set up in their home environment for this. To do so some had to incur some extras expenses and inconveniences, for example
- Investing in a printer that would allow them to scan documents
- Purchasing common office supplies
- Buying a desk to be able to work off of
- Rearranging a room in the home to allow for a mini office set up
- An increase in cost for the use of electricity
Outside of the Norm
In normal circumstances, there are employers who will have some of their employees work from home. In these cases, the employee may be eligible to claim some work related expenses. When they do they are required to file a T2200 form which is the Declaration of Conditions of Employment. This has to be filled out by the employee and then submitted with the employee’s tax return if they are making a claim.
In this case with this new tax deduction for work at home expenses this form is not required.
Flat Rate New Tax Deduction
It appears as though this is going to be a flat rate deduction that is only going to be applicable to the tax year 2020. The information about this new tax deduction was released in the fall economic statement.
Information Yet To Come
Further information about this new tax deduction and the actual rules and how to file for it should be released shortly.
Avoid The Confusion
It is important that individuals who are going to take advantage of this new tax deduction don’t get confused with the rules and formats used for employees who normally work from home.
If you feel that you may qualify for this new tax deduction and want some assistance with your tax preparation and filing this year then be sure to contact me so I can explain how I can help.
