Mondaq uses cookies on this website. By using our website, you consent to the use of cookies in accordance with our privacy policy

CRA Announces New Simplified Process for Claiming Work
Home ownership costs and formalizing the tax treatment of certain employers
Employee benefits during the COVID-19 pandemic

On 15 December, the Canada Revenue Agency (the
“CRA”) released additional details
in relation to the availability of employee allowances for the work of
House expenses and taxation provided by certain employers
Employee benefits during the COVID-19 pandemic

These new rules are a welcome relief and clarity
Many employers and employees are already struggling with a difficult 2020
Because of the pandemic there were many questions and concerns
what the existing rules for deducting home office expenses for employees would look like
Work in 2020 with many employees (almost all in some industries)
Working from Home For example, there has been some uncertainty about this
how to apply the condition to which an employee must be obliged
mainly work from home to keep the house busy
Office deduction From the employer’s perspective
the requirement to fill out Form T2200 for a significant number of
The workers who worked from home seemed unnecessarily burdensome

Likewise, take social distancing and other health measures
in place by the public health authorities meant that normal
Commuting and work processes were disrupted to address
Due to these concerns, the rating agency provided additional relief
in relation to the taxation of certain employee benefits during the
COVID-19 pandemic to reduce some of the additional costs
associated with travel for safe work

Employees can usually claim home office expenses
Deduction if they worked from home due to COVID-19 in 2020
Pandemic (or being asked to work from home) and
Specifically, worked from home more than 50 percent of the time
for a period of at least four consecutive weeks in 2020

For 2020, employees can usually choose between two methods
Deduct labor from household expenses: (i) a newly introduced temporary
Flat rate method; or (ii) the detailed method used by the
Completion of a T2200 or a T2200S by the employer

To be eligible for the flat rate method, an employee must have
worked from home more than 50% of the time for a period of at
at least four consecutive weeks due to the COVID-19 pandemic
Eligible employees can request a $ 2 per day allowance for each day
worked from home during this time, plus any additional working days
from home in 2020 due to the COVID-19 pandemic The flat rate
Method allows a maximum deduction of $ 400 (ie 200 days)

The flat rate method is currently only available for 2020. It is
easier than the detailed method which neither requires a calculation of
the size of a home office or receipts (e.g.
Example) The employee can only use this method to get home
Office costs and no other employment costs The employee
will still be eligible for the flat rate method if the employer
reimburses the employee for some, but not all, of their home offices
Cost

The employee claims the costs according to this method through selection
“Option 1” in Form T777S and including the form with the
Tax return of the employee

An employee whose work from home exceeds their $ 400 apartment
Rate may opt for the detailed method The detailed method
requires an employer to fill out either a T2200 or a new one
simplified form, the T2200S, and that the employee fills out a form
T777 or T777S to support this process, the CRA has announced
that it accepts electronic signatures on the T2200 and
T2200S

The T2200S is shorter than the T2200 and only for employees
that worked from home due to the COVID-19 pandemic One employer
just need to confirm whether the person has worked at home due
about the pandemic, whether they were reimbursed for their home office costs
and whether these costs are shown on the employee’s T4

The rating agency has provided a list of eligible expenses for employees and
Commission staff can use a percentage of electricity, heat,
Water, the supply portion (electricity, heat, water) of
Condominium fees, home Internet access fees, maintenance, and utilities
Repair costs and rent Authorized employees can also a
Percentage of home insurance, property taxes and amounts paid
leasing a cell phone, computer, laptop, tablet or fax
Machine, insofar as the expenses relate appropriately
Earning Commission Income In accordance with previous practices,
Ineligible expenses for all employees include mortgage interest,
Main mortgage payments, home internet connection fees,
Furniture, capital costs and wall decorations

There are several restrictions on working from home
that can be claimed according to the detailed method
(i) if an employee only worked at home part of the year,
Expenses can only be claimed for periods in which the employee
worked from home; (ii) if an employee had multiple earnings
Sources, expenses can only be claimed from the income that the
Expenses related to; and (iii) Charges can only be claimed for one
Amount up to the amount of earned income and not more
Quantity When an employee has expenses that exceed their costs
Income, expenses can be carried forward to the next year,
provided the employee earns income from the same employer in
The next year

The employee claims the costs according to the detailed method of
Select “Option 2” on Form T777S if the employee is
Entitlement to the amount actually paid, which is paid by working from home
and do not request other employment costs or using the form
T777 if the employee has to work from home or if he is working
from home due to the COVID-19 pandemic and entitled to additional
Employment Expenses Both Form T777S and T777 must be submitted
Supporting documentation with the employee’s tax return and
The completed form T2200S or T2200 must be kept by the
Employee

The rating agency has also formalized previously announced positions
in relation to the taxation of certain commuting and home office expenses
According to the CRA, these positions are available from Jan. March effective
until 31 December 2020

Allowances, reimbursements and payments for commuting expenses and
Parking costs usually represent taxable services for a
Employee The employee usually has to indicate the value of it
Benefits in his / her income and the employer must avail of the benefits
when calculating the wage deductions

However, given the COVID-19 pandemic, the rating agency has decided
the following positions relating to the taxation of the employee
Benefits of commuting and parking:

An employer must keep appropriate records showing that
Appropriateness of any allowances in relation to commuting costs If
An employee uses a vehicle provided by the employer The worker should do this
Keep a record of the number of kilometers traveled
the worker between his home and the regular place of
Employment

When an employer provides home office equipment to an employee
or an allowance or reimbursement for home office equipment that
Employee can realize a taxable benefit The employee must include
the value of this benefit in his taxable income The employer
must take into account the benefit for the wage deduction
Purposes

In view of the COVID-19 pandemic, the rating agency has planned this
an administrative concession in relation to such services The CRA
will not assume that an employee has received a taxable benefit if
Employer pays or reimburses up to $ 500 for computers or at home
Office equipment so that the employee can use their
Work obligations The employee must receive receipts for the
Computer / home office equipment to employer

The limit of $ 500 is an overall limit per employee The $ 500
The limit does not apply to each purchase of a computer or separately
Home office equipment For example, if an employer has a
Employees for three computer or home office devices
If the total value is $ 750, the employee will realize a taxpayer
$ 250 benefit ($ 750 minus $ 500) The $ 500 limit applies
does not apply to every device

The rating agency also found that an employer is operating within its existing policy
can pay or reimburse the cost of an employee’s cell phone
Serviceplan or home internet service and such payment or
The reimbursement does not represent a taxable service to that extent
that the employee uses the plan or service to carry out his / her own
Labor duties

When an employer offers meals to an employee who works for them
regular job during regular working hours (or offers
Reimbursement or allowance for such meals), the employee will
usually realize a taxable service The CRA has none
updated position on food taxation for
Employees The rating agency noted, however, that an employee may not realize this
a taxable benefit for overtime meals or allowances or subsidies
Meals under certain circumstances according to the existing rating agency
Guidelines

The announcements by the rating agency should bring some relief
Employers, especially large employers, in relation to theirs
Obligations to the T2200s file for their employees and payroll
Withdrawal and remittance obligations related to the extra
Commuting and home office costs that employees see as
Result of the COVID-19 pandemic Still, something remains
Complexity, as employers have to help decide on a policy
in regards to the output of T2200S to its staff, as it may not be
Immediately visible which employees will rely on temporary work
Flat rate method or the detailed method

The content of this article is intended to provide general content
Guideline on the subject Expert advice should be obtained
about your particular circumstances

© Mondaq® Ltd 1994 – 2021 All rights reserved

E-mail

password

Free, unrestricted access to more than half a million articles (restriction to one article removed) from the different perspectives of 5000 leading legal, auditing and consulting firms

You only need to do this once Readership information is intended for authors only and is never sold to third parties

We need this so that we can match you with other users in the same organization This is also part of the information we share with our content providers (“Contributors”) who provide content for your use free of charge

CRA

World News – CA – CRA releases details on Home Expense Withholding and Certain Employer-Provided Benefits – Taxes – Canada

Source: https://www.mondaq.com/canada/property-taxes/1021528/cra-releases-details-on-work-from-home-expense-deductions-and-certain-employer-provided-benefits