Many offices and workplaces across Canada are busier with people these days than at any time since the start of the COVID-19 pandemic. Lockdown life, one hopes, is now permanently a thing of the past.
Even so, millions of Canadians still work from home much of the time and did for a majority of 2022. As a result, many people are eligible to deduct home office expenses on their personal income tax return once again this year. For most, that deduction will come using what’s called the Temporary Flat Rate method.
Temporary Flat Rate Method
If you worked from home at least 50 per cent of the time for a period of at least four consecutive weeks in 2022, you can claim a deduction of up to $500 through the same Temporary Flat Rate method the Canada Revenue Agency has used in each of the past three tax years, beginning with 2020.
The appeal of the flat rate method is its simplicity. CRA doesn’t require any of the cost information or workspace-in-the-home details needed for more detailed home office expense claims. All you do is add up the number of days you worked from home and give yourself a $2 deduction for each of them, up to a maximum of $500 on 2022 tax returns.
You’re eligible to claim the deduction even if you only worked part-time hours from home, or if you went back to your regular workplace before the end of the year, as long as the four-week eligibility rule is met. It also doesn’t matter whether you chose to work from home, or your employer mandated it.
If you live with a spouse, partner, or roommate, there’s no household limit on who can use the Temporary Flat Rate method; anyone who meets the four-week eligibility can claim the deduction.
The Detailed method
In some situations, particularly if you rent your home or have high expense costs, it may be more beneficial to use the Detailed method. This involves claiming the eligible part of actual amounts you paid on various costs, including rent, utilities such as electricity, heat, and water, fees for internet and cell phone service, office supplies such as printer ink, pens, and paper, as well as landscaping, maintenance, and minor repair costs for the workspace, such as cleaning supplies or light bulbs. Importantly, you’ll need supporting documentation, such as bills and receipts, to show to the CRA in case they question your claim.
If you work on commission (most self-employed people fit into this category, whether they sell services or products), you can also claim costs associated with property taxes and home insurance, as well as any leasing costs for phones or computers used for work. Remember that if you buy items such as these for work-related purposes, they are considered capital costs and must be claimed under Capital Cost Allowance.
If you use the Detailed method, you also have to determine how much of your home qualifies as workspace, expressed as a percentage of your home. You’ll multiply your total costs by this percentage to determine the amount of your deduction.
No matter whether you earn a salary or work on commission, no one is eligible to claim deductions on mortgage payments or mortgage interest, capital costs such as new windows or flooring, or costs associated with furnishings and wall decorations.