Canada’s $400 Home Office Expense Deduction

As the pandemic is forcing millions of people to work from home, Justin Trudeau’s Liberal government has announced a new $400 home office expense deduction to help Canadians manage the costs of working from home.

For a growing number of Canadians and companies alike, remote working has become a cultural norm. A survey conducted by Massachusetts Institute of Technology found that 50% of people who were employed before the pandemic are now working from home or remotely.

Although working from home has its benefits, there are hidden costs that come with it. The new personal income tax deduction is looking to offset some of the costs.

$400 Home Office Expense Deduction

As part of her fiscal economic budget, Chrystia Freeland stated that Canadians will be able to deduct up to $400 under a simplified “Home Office Expense Deduction on their 2020 income tax returns.

“Millions of Canadians are unexpectedly working from home because of COVID-19. They are turning their bedrooms, basements, and kitchens into offices, and taking on increased household expenses to do their jobs.”

Liberal Government Economic Statement

Although Canadians are currently allowed to deduct certain office expenses, the new home office deduction makes the process much simpler. Under the current rules, you’re able to only deduct expenses that will not be reimbursed by your employer such as electricity, heating, and maintenance costs. In addition, one must be working from home more than 50% of the time. However, the new $400 home office expense deduction has loosened the rules.

“To simplify the process for both taxpayers and businesses, the CRA will allow employees working from home in 2020 due to COVID-19 with modest expenses to claim up to $400, based on the amount of time working from home, without the need to track detailed expenses, and will generally not request that people provide a signed form from their employers”

Liberal Government Economic Statement

Finance minister Chrystia Freeland stated that she is willing to “do whatever it takes to help Canadians stay healthy, safe and solvent.” This $400 home office expense deduction will surely go along way.