11 January, 2021 Financial Planning

Planner’s Corner: Working from home? Do not miss out on valuable tax savings

work from home

Covid-19 has been made a major game-changer for how some employees do their work. Traditional face-to-face meetings, conferences, and everyday commutes have been replaced with Zoom calls, webinars, and a short commute from one’s bedroom to what may be a makeshift home office. This new working-from-home arrangement can be turned into tax savings when it comes time to file your 2020 tax return and perhaps in future years.

Canada Revenue Agency (CRA) allows employees who are required to work from home to claim deductions for work-space-in-the-home expenses provided they meet one of these conditions:

  • The workspace is where you mainly do your work (more than 50% of the time) for at least four consecutive weeks in 2020 due to the pandemic.


  • You use the workspace only to earn employment income. You also must use it on a regular or continuous basis for meeting clients, customers, or other people in the course of your employment duties.

Two options are available to take advantage of this deduction:

Option #1 is to claim “modest” expenses of $2 per day an employee worked at home up to $400 in 2020 with no need for an employee to track detailed home office expenses or for an employer to issue a T2200 “Declaration of Conditions of Employment”. For someone in a middle-class tax bracket* this will save them a maximum of $122 ($400 x 30.5%).

If home office expenses exceed $400, Option #2 is to have your employer complete a T2200 or the simplified version for 2020, a T2200S “Declaration of Conditions of Employment for Working at Home Due to COVID-19”. Home office expenses can include rent, utilities, home internet fees, supplies and repairs, and maintenance but not mortgage interest or capital cost allowance. You can also deduct property taxes and home insurance if you are a commissioned employee. These expenses need to be allocated on a proportion based on the amount of workspace the home office occupies. This is aside from repairs and maintenance, which is deducted based on the expense related to the workspace. The deduction for a home office is limited to the amount of net employment income; that is, you cannot create or increase a loss from employment. Any expenses that cannot be deducted in a year can be carried forward and potentially used in future years. For example:

Total square footage of home

1,200 square feet

Home office square footage

300 square feet

Number of months working from home


Total eligible home office expenses over a period


Eligible deduction  (300/1,200 sq feet) x $5,000


Tax savings ($1,250 x 30.5%*)


The key is to track your home expenses and determine which option is most beneficial.

The key is to track your home expenses and determine which option is most beneficial. I recommend consulting with an accountant or income tax preparer for assistance and to stay up to date on Canada Revenue Agency’s regulations.

Jim Hummel, CFP, CKA®


* Income between $48,536 and $97,069 for Alberta residents.