EMPLOYEE HOME OFFICE EXPENSES: FLAT RATE METHOD DURING COVID
As noted above and discussed in more detail in our June 2020 Tax Letter, employees can deduct certain home office expenses. Normally, you need to keep records or receipts, certain conditions apply, and the Form T2200 must be signed by their employer.
Obviously, during the current COVID-19 pandemic, many employees have been working from home. As a result, the Canada Revenue Agency will allow an alternative, simplified “flat rate” method for deducting home office expenses for the 2020 year. If you qualify and choose this method, you do not need to keep records or receipts or obtain the Form T2200.
You are eligible to use the flat rate method if you worked more than 50% of the time from home for a period of at least four consecutive weeks in 2020 due to the pandemic. If you were not required to work at home but your employer gave you the option to work at home because of COVID-19, you can still qualify. You can use the flat rate method only if you do not claim other employment expenses. In other words, you can use the method if you claim only home office expenses.
Under the flat rate method, you can deduct $2 for each day that you worked from home in 2020 because of COVID-19. The maximum you can deduct under this method is $400 (that is, $2 x 200 days). As a result, you should use this method only if you are not eligible for more than $400 of deductions under the regular rules.
The CRA has indicated that the flat method can be used for the 2020 tax year. It has not indicated whether the method can be used for the 2021 year.