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Canadians can get a $400 tax credit for working from home during COVID-19

Canadians can get a $400 tax credit for working from home during COVID-19
/ EmirMemedovski / E+ / Getty Images

Canadians can get a $400 tax credit — no questions asked!

Since the start of the pandemic, millions of Canadians have been asked to work from home and while there are plenty of benefits in doing so— it also means spending more money on things such as hydro, utilities, and your internet service.

Because of this, the federal government has announced that it’s proposing to allow Canadians working from home this year to claim “modest” expenses of up to $400.

The announcement was made on Monday in a new pandemic recovery plan, which contains about $100 billion of spending.

“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,” the Liberal government said in its economic statement.

While Canadians working from home were already entitled to deduct certain office expenses, the current rules can be confusing and hard to understand. In order to simplify things for both taxpayers and businesses, the Canada Revenue Agency (CRA) is now allowing employees to claim up to $400, no questions asked. In other words, there is no need to track detailed expenses nor will you require a signed form from your employer.

“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.”

Under the current rules, you may only claim expenses that will not be reimbursed by your employer and obviously, these expenses must relate to your work. In addition to this, you must be working from home more than 50 per cent of the time.

“You can only deduct workspace expenses from the income to which the expenses relate and not from any other income,” the government of Canada website notes. “If you cannot deduct all your workspace expenses in the year, you can carry forward the expenses.”

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