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Helping Your Ontario Employees Claim Home Office Expenses For 2021

[fa icon="calendar"] Mar 14, 2022 9:51:31 AM / by Allen Koroll

Claiming Home Expenses Tax 2021Employees who work from their homes have always been able to claim home office expenses. To do this, the employee had to meet specific criteria, retain receipts, calculate the portion of expenses that were related to work and get certification from their employer.

The problem was that the number of employees working from home in 2020 increased substantially because of the pandemic. Many of these employees were new to claiming home office expenses, which meant there was a substantial learning curve. It also meant more paperwork for employees, employers and the CRA. 

As such, the CRA decided to introduce a flat rate method to simplify this process. 

As with 2020, many employees who normally worked in office continued to work from home for all or a portion of 2021. As such, these employees may again use the temporary flat rate method on their tax return - employees will also be able to use the flat rate method for the 2022 tax year.

How does the flat rate method for home office expenses work?

Under this method, your employees must have worked from home for more than 50% of the time over four consecutive weeks in 2021. 

This includes being required to work from home or choosing to work from home when an employer provides the option because of the pandemic. Once your employees meet this requirement, they can claim any additional days they worked from home due to the pandemic, even if they do not add up to 50% of their work week. 

Note: If your employees are claiming other employment expenses on Line 22900 (such as motor vehicle expenses), or you reimburse employees for all their expenses, they cannot use the flat method. 

If your employees do use the simplified method, they won’t have to save bills for eligible expenses or calculate the portion of these expenses that were work related. Instead, your employees can simply claim $2 for each day they worked from home up to a maximum of 250 days (total deduction of $500) in 2021 and 2022. For 2020, employees can claim $2 per day for up to 200 days.  

If employees claim expenses using the flat rate method, you will not need to submit a T2200 or T2200S. 

What about the detailed method for home office expenses?

If your employee is claiming other employment expenses on Line 22900, they will have to use the detailed method. Employees can also opt to use the detailed method if they incurred more expenses than the amount provided using the flat rate method. 

To be eligible for the detailed method of calculating home office expenses:

  • The home workspace must be where your employee worked for more than 50% of the time for at least four consecutive weeks; OR 
  • The employee must only use the workspace for earning income from employment and they must also use it on a regular and ongoing basis to meet clients, customers and other people as part of their employment duties. 

Under this method, your employee will be claiming the employment portions of actual expenses paid. As a result, they’ll have to collect all bills for eligible expenses. Eligible expenses for 2021 include: 

  • Electricity 
  • Heating 
  • Water 
  • Utility portion of condo fees (see CRA website for details)
  • Home internet access fees (does not include connection or lease fees)
  • Employment use of basic cell phone plan 
  • Long distance calls for employment purposes
  • Home maintenance and minor repair costs related to workspace 
  • Rent paid for house or apartment (you can’t claim a rental value on the workspace and mortgage payments are not eligible)
  • Property taxes (commission employees only)
  • Home insurance (commission employees only)
  • Lease on electronics (commission employees only)

Once your employee has gathered their receipts, they will have to determine what portion of their home was used for their home office and when they worked from home (i.e. you can’t claim expenses for any time when you were back at work full time). 

Employees can also claim additional expenses if you require them to pay for office supplies, including but not limited to:

  • Envelopes 
  • Folders
  • Highlighters
  • Ink Cartridges 
  • Notebooks 
  • Paper clips 

These expenses cannot be claimed under the flat rate method. If your employee opts for the detailed method, you will have to complete a T2200 or T2200S. 

For more information on employee’s claiming home office expenses for 2021 or 2022, contact our team of chartered professional accountants today

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The information presented is only of a general nature, may omit many details and special rules, is current only as of its published date, and accordingly cannot be regarded as legal or tax advice. Please contact our office for more information on this subject and how it pertains to your specific tax or financial situation.

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Topics: CRA, Tax Tips

Allen Koroll

Written by Allen Koroll