For the 2020 year, many employees were required to work from home due to the COVID-19 pandemic. Those employees generally had two deduction possibilities: using the flat method of claiming $2/day the individual worked from home, or doing a detailed calculation to claim the actual costs associated with working from home. While the first option was only a temporary relieving measure for the 2020 year, the Liberal election platform promised to extend access to this deduction for the 2021 and 2022 years.
In the summer of 2021, CRA started to review these claims. A tax journalist from the Financial post, was one of the individuals selected for review. He discussed his experiences in an August 5, 2021 article (What you need to know if the CRA reviews your home office expense claims, Jamie Golombek). The author had used the detailed method to claim actual workspace in home expenses and was asked to provide (among other items):
- an employer-signed Form T2200 and a Form T777 setting out the claims;
- receipts and supporting documents, noting that credit card statements, bank statements, or cheques would not be sufficient support;
- for the workspace itself, the calculation details for the percentage claimed, including space used for employment and personal purposes and a copy of the floor plan of the residence with the home office; and
- for cell phone expenses, CRA requested copies of the mobile contract, monthly account summaries, proof of payment, and a breakdown of the minutes and data used to earn employment income.
Similar to other deductions against income, not all claims are reviewed; nonetheless, taxpayers should be prepared to provide this level and type of detailed support. Also, in a Technical Interpretation, CRA confirmed that the temporary flat-rate claim of $2 per day (maximum $400) can be deducted by adult children living at home provided that they contribute towards the payment of eligible home office expenses and meet the relevant eligibility criteria.
ACTION ITEM: Be prepared to provide detailed supporting documentation for workspace in home claims made under the detailed method.
