View this email in your browser

What’s Changing About The Work From Home Deduction for 2023 Returns?

• Elimination of Flat Rate Method: The temporary flat rate method, which was introduced during the pandemic ($2 per day for up to 250 days, or $500 last year), does not apply for the 2023 tax year. In prior years, this method allowed employees to claim a set amount without the need to track specific expenses or obtain employer certification.

• Requirement for Detailed Method: Employees looking to claim home office expenses for the 2023 tax year must use the detailed method. This involves tallying actual expenses related to working from home and obtaining a completed Form T2200 (Declaration of Conditions of Employment) from their employer.

• Form T2200 Requirement: To claim home office expenses, employees now need a Form T2200 that is reviewed and signed by their employer, specifying that the employee was required to work from home. The “simplified” Form T2200S is not applicable anymore.

• Eligibility: For the 2023 tax year, the CRA has stated you will be qualified to write off your home-office expenses if your home workspace is where you “principally” — meaning more than 50 per cent of the time — performed your duties of employment for a period of at least four consecutive weeks during 2023.

• Basis of Allocation: The home-office expense deduction is calculated based on eligible home-office expenses, the percentage of the home’s area that’s used for a home office and, for a shared space such as the kitchen table, the amount of time worked from that space. To make your claim, you’ll need to complete CRA form T777 Statement of Employment Expenses, and file it with your income tax return.

• Voluntary Telework Arrangement: Employees who have voluntarily entered into a formal telework arrangement with their employer are considered to have been required to work from home, making them eligible for deductions.

• Type of Expenses: You can claim a variety of home-office expenses, such as the cost of utilities, rent, maintenance and minor repair costs, and home internet access fees. You generally can’t deduct mortgage interest, property taxes, home insurance, capital expenses (such as changing a furnace or windows) or depreciation (capital cost allowance).That means the cost of a new, ergonomic office chair isn’t tax deductible, nor is the cost of a large, widescreen monitor, both of which are considered capital expenses. The cost of most standard office supplies, such as printer paper, ink, pens and sticky notes, are also deductible.

• Commissioned Employees: Commission-based employees who sell goods or negotiate contracts can claim some expenses that salaried employees cannot, specifically: home insurance, property taxes and the costs to lease a cellphone, computer, laptop, tablet, etc., that relate to earning commission income.

These changes signify a shift back to pre-pandemic rules and may require more documentation and specific expense tracking for employees. It’s essential for those planning to claim these expenses to prepare accordingly and consult with our Tax Team to ensure compliance and optimize deductions.

✌️

Think Team

Copyright (C) " target="_blank">unsubscribe