Ottawa also details how commuting expenses are being calculated during pandemic
The Canada Revenue Agency (CRA) is further clarifying how taxable benefits should be handled for people working from home amid the pandemic.
The CRA has made the home office expenses deduction available to more Canadians, and simplified the way employees can claim these expenses on their personal income tax return for the 2020 tax year.
Employees with larger claims for home office expenses can still choose to use the existing detailed method to calculate their home office expenses deduction, says the government.
Home office expenses
Employees who worked from home more than 50 per cent of the time over a period of a least four consecutive weeks in 2020 due to COVID-19 are now 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 they 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. Under this new method, employees will not have to get Form T2200 or Form T2200S completed and signed by their employer.
To simplify the process for employees choosing the detailed method, the CRA launched simplified forms (Form T2200S and Form T777S) and a calculator designed specifically to assist with the calculation of eligible home office expenses.
The CRA will not consider an employee to receive a taxable benefit if their employer pays for or reimburses up to $500 of computer or home office equipment to enable the employee to carry out their employment duties, provided the employee submits receipts to the employer.
The government notes that the $500 reimbursement amount is in respect of each employee rather than each piece of computer or office equipment. For example, if an employee buys a computer for $400 and an office chair for $250, an employer can reimburse the employee up to $500 without the employee receiving a taxable benefit under the administrative position.
But if the employer reimburses the employee the full amount for these purchases, the amount over $500 ($150) must be included in the employee’s income.
Employees who are required to commute to their regular places of employment to work may incur additional commuting costs to minimize their risk of exposure during the COVID-19 pandemic. They may also incur costs to commute to their regular place of employment to pick up equipment that enables them to perform employment duties from home. The following tax treatment applies in these situations:
Employee continues performing their employment duties at their regular place of work: The CRA will not consider an employee to receive a taxable benefit if their employer pays for, reimburses or provides a reasonable allowance for additional commuting costs incurred by that employee during the COVID-19 pandemic, that are over and above their normal commuting costs. This position is extended to the use of employer-provided motor vehicles for such travel, as long as the employee did not normally commute to work using an employer-provided motor vehicle before the COVID-19 pandemic.
Employee is performing their employment duties at home because their regular place of work is closed: The CRA will not consider an employee to receive a taxable benefit if their employer pays for reimburses, or provides a reasonable allowance for normal or additional commuting costs incurred by the employee to travel to their regular place of employment for any purpose that enables them to perform their employment duties from home (for example, to pick up equipment). This position is extended to the use of employer-provided motor vehicles for such travel.
Similarly, when a regular place of employment is closed due to the COVID-19 pandemic, the CRA will not consider an employer-provided parking spot at that place of work to be available for an employee’s use. As such, the employer-provided parking will not result in a taxable benefit.
In both situations, employers are expected to maintain appropriate records to demonstrate that any allowances provided are reasonable in relation to the commuting costs incurred by the employee, says the CRA. Employees are expected to maintain appropriate records to account for their use of the employer-provided motor vehicles, including the total kilometers driven when commuting between home and their regular place of employment.