New Tax Deduction Aims to Help Remote Workers

Canadians may be eligible for a significant tax deduction – if the pandemic has forced them to work from home.

This federal tax break, dubbed ‘work-space-in-the-home’, could potentially help hundreds of thousands of Canadians who have been forced by the pandemic to continue their work remotely.

The tax category also applies to those who would otherwise be working from home, even without the pandemic. The difference for newly eligible Canadians is that they may need to update their employment contracts, to show that their working agreement lists WFH as a condition of their employment. To qualify, taxpayers have to spend at least 50 percent of their working hours at home.

The clause will allow those qualified for the deduction to claim expenses like utility bills, cleaning and rent, along with consumable items such as stationery, writing instruments, and printer toner. According to the CRA, 174,210 Canadians made WFH-related deductions on their 2018 tax returns, claiming an average of $1,561.

Still, some extra work-related costs may not be claimed according to the current rules. Items such as printers and laptops are considered to be capital expenses, and therefore not deductible.

Armando Minicucci, a partner at the accounting firm Grant Thornton, said the severity of the pandemic means that more people should be able to benefit from ‘work-space-in-the-home’ tax relief. “We’re getting further and further along in this pandemic where a lot of employees are going to have exceeded the six-month mark, and in that situation they should qualify,” he said.

However, it remains unclear whether those who have not met the six-month mark will be eligible for reimbursement. The exact clarifications on what can and cannot be reimbursed have not yet been provided by the CRA.

Minicucci suggested that employees working from home would be wise to update their contracts with employers to meet the ‘work-space-in-the-home’ requirements, while also keeping hold of their receipts and statements on related expenses.