Business use of home tax changes

Author: Proactive Accountants Inc. | | Categories: Accounting , Bookkeeping , Business Consultation , Corporate Tax Returns , Estate Returns , Financial Statements , GST Filing , Personal Tax , PST Returns , Small Business Accountants , T-3 Trust Returns , T1 Income Tax , Tax Accountants , Tax Audit , Tax Planning , Tax Preparation

Blog by Proactive Accountants Inc.

Due to the Covid pandemic, the Canada revenue Agency has made some tax changes to the home office expenses allowed on personal tax returns. Many taxpayers can now use a simplified method of claiming these expenses on their personal tax return. Employees with larger claims for home office expense can still choose to use the existing detailed method to calculate their home office expense deduction.

Employees who worked from home more than 50% of the time over a period of four consecutive weeks in 2020 due to COVID-19 will now be eligible to claim the home office expenses deduction for 2020.

A new temporary flat rate method will allow eligible employees to claim a deduction of $ 2 for each day worked at home in that period, plus any other days they worked from home in 2020 due to COVID-19 up to a maximum of $400.

Hopefully to simplify the process for employees choosing the detailed method, the CRA launched today simplified forms(Form T2200S and Form T777s) and a calculator specifically to assist with the calculation of eligible home office expenses.

The employees will have to get Form T2200 or Form T2200s completed and signed by their employer if they use the detailed method. If the taxpayer uses the flat rate method they do not have to get these forms signed.