As more and more Canadians continue to work from home, the topic of claiming home office expenses has become increasingly important. While many people assume that working from home means automatic deductions, the truth is that the rules around claiming home office expenses can be quite complex. In this post, we’ll go over everything you need to know about claiming home office expenses in Canada.

What are home office expenses?

Home office expenses are expenses related to the workspace that you use in your home for work purposes. This can include expenses related to utilities, rent or mortgage interest, and maintenance and repairs. If you’re self-employed, you can also claim expenses related to the capital cost of your workspace, such as furniture and equipment.

Who can claim home office expenses?

In order to claim home office expenses, you need to meet certain criteria. Firstly, you must be either an employee who is required to work from home by your employer, or self-employed and using your home workspace for more than 50% of your work time. Additionally, your workspace must be used exclusively for work purposes and not for personal use.

What expenses can be claimed?

There are two types of expenses that can be claimed: direct expenses and indirect expenses. Direct expenses are expenses that relate solely to your home office, such as office supplies or equipment. Indirect expenses are expenses that are shared between your home office and personal use, such as utilities or rent.

For direct expenses, you can claim the full cost of the item. For indirect expenses, you can claim the portion of the expense that relates to your home office. For example, if you use 10% of your home’s square footage for your home office, you can claim 10% of your utilities and rent.

How to claim home office expenses?

To claim home office expenses, you must complete Form T777, Statement of Employment Expenses, or Form T2125, Statement of Business or Professional Activities. You will need to keep detailed records of your expenses, including receipts, bills, and invoices. It’s important to note that if you’re claiming expenses as an employee, your employer must complete Form T2200, Declaration of Conditions of Employment.

What are the limitations?

There are some limitations to claiming home office expenses. Firstly, you cannot claim expenses related to the cost of buying or renting your home, including mortgage payments or property taxes. Additionally, you cannot claim expenses related to capital expenses, such as renovations to your home office space. Finally, the amount that you can claim is limited to the amount of income that you earned from your home office.

In conclusion, claiming home office expenses can be a complicated process, but it can also result in significant tax savings. As always, it’s important to consult with a tax professional to ensure that you’re following all of the rules and regulations. With the rise of remote work in Canada, it’s more important than ever to make sure that you’re taking advantage of all the tax benefits available to you.