Hundreds of thousands of Canadians could be eligible for a lucrative tax deduction as a result of the COVID-19 pandemic.
But just how many get to claim that deduction could depend on their employers, and on how the Canada Revenue Agency deals with a series of questions raised by the sudden changes that have compelled millions of Canadians to work from home.
Armando Minicucci, a partner with the accounting firm Grant Thornton, said he expects a big increase in the number of Canadians able to claim a deduction for turning part of their home into an office.
“I would say the number would have to be in the hundreds of thousands,” he said.
It’s called the “work-space-in-the-home” deduction and you can claim it if you work from home more than 50 per cent of the time, or if you have a separate home office and use it to meet clients.
Either way, your employer has to certify that working from home is a condition of your employment. According to the Canada Revenue Agency (CRA), 174,210 Canadians took advantage of the deduction on their 2018 tax returns, claiming an average per person of $1,561.
The deduction allows those who qualify for it to reduce their tax bills by claiming a portion of their household expenses — such as utilities, cleaning and rent.
Normally, the number of people who can claim the deduction is limited. To qualify, you either have to spend more than 50 per cent of your time working from home, or you have to use a home office exclusively for work and regularly meet clients there.
How the pandemic changed things
The current rules require anyone claiming the deduction to get their employer to fill out a form — T2200 — certifying that working from home is a condition of employment. Without that form, the claim would be rejected, said the CRA.
But that was before the pandemic hit.
In March, as COVID-19 began to spread in Canada, public health authorities urged Canadians to stay home. Governments issued orders closing non-essential businesses and employers across the country began telling employees who could do their jobs remotely to work from home.
By mid-April, 3.3 million Canadians had moved out of their regular workplaces and were working from home, according to Statistics Canada’s June Labour Force Survey. While that number dropped by 400,000 in June, millions of Canadians are still working from home.
Some employers, like Ottawa-based Shopify, have told employees they can work from home indefinitely.
By September, those sent home to work in March will have worked at least half the year at home — potentially putting them in a position to qualify for the deduction.
“We’re getting further and further along in this pandemic where a lot of employees are going to have exceeded the six-month mark, and in that situation they should qualify,” said Minicucci.
“But for those employees that have not worked the full six months or more at home, there’s a question with respect to whether or not they meet the eligibility criteria.”
Whether those who haven’t worked a full six months from home will be allowed to claim the deduction is one of the questions Canada’s tax experts have asked the CRA to clarify, said Minicucci.
Keep those receipts
Even if some of those working from home end up falling short of the six-month benchmark, they can still deduct the cost of many of the supplies they have had to consume to get the job done, he said.
“You’re looking at things like pens, paper, ink cartridges for your printer at home,” he said. “Those are items that are consumed. Capital items, unfortunately, are not deductible. So if you buy a printer, not deductible. If you buy a laptop, not deductible. Those are capital items.
“But if you buy items that are being consumed during the course of performing your employment duties, they are deductible. The 50 per cent criteria is not a condition in order to claim expenses for items that you consumed while performing your duties at home.”
An employee works from home over the Zoom platform. Accountants are asking the federal government to clarify the rules on claiming the home office deduction. (Gabby Jones/Bloomberg)
Minicucci said now is a good time to talk with your employer about updating your employment contract, and to keep track of your receipts.
The pandemic has raised a number of questions that Canada’s tax experts have asked the CRA to clarify, he added.
For example, will the CRA require each person to have a formal employment contract? Given the stay at home orders, should meeting clients through videoconference or teleconference platforms from home count as “meeting clients at home”? Should the CRA relax the rule that says you can’t claim internet as a work-from-home expense because it’s considered a fixed cost?
A lot of paperwork for employers
The Chartered Professional Accountants of Canada (CPA Canada) also anticipates an increase in the number of Canadians claiming the home workspace deduction for the first time, and is also calling for the CRA to clarify several questions.
For example — should the CRA still require employers to fill out a T2200 form for every employee they asked to work at home?
“Employers will now be required to complete a great number of T2200s,” CPA Canada said in a background paper. “This will add a significant administrative burden for employers. To alleviate the burden, consideration should be given to using an alternative method to simplify the process for the pandemic.”
CPA Canada said it would like the CRA to clarify whether the “more than 50 per cent of the time” benchmark is calculated for the tax year, or for the period the employee was required to work from home. It also said the CRA should consider simplifying the process by allowing taxpayers to claim a per diem deduction for costs related to working from home.
No rule changes planned, says Finance
However, officials from the CRA and the Finance Department told CBC News there are no plans currently to change the rules on the home workspace deduction.
Conservative revenue critic Marty Morantz is calling on the government to clarify its plans for the deduction, and has put questions about the deduction on the House of Commons’ order paper. He said those who have been working from home should be allowed to claim the deduction.
“I think it would be very reasonable for the government to say to folks who were doing their best to comply during the crisis by working at home, and incurring expenses, that they should have the opportunity to claim the deduction,” he said.
Aaron Wudrick, federal director of the Canadian Taxpayers Federation, agreed.
“The deduction exists for a reason — to defray work-related costs that just happen to be home-related and if that reason now applies to a broader class of people, they should be able to make use of it,” he said.
Elizabeth Thompson can be reached at elizabeth.thompson@cbc.ca
VANCOUVER – Contract negotiations resume today in Vancouver in a labour dispute that has paralyzed container cargo shipping at British Columbia’s ports since Monday.
The BC Maritime Employers Association and International Longshore and Warehouse Union Local 514 are scheduled to meet for the next three days in mediated talks to try to break a deadlock in negotiations.
The union, which represents more than 700 longshore supervisors at ports, including Vancouver, Prince Rupert and Nanaimo, has been without a contract since March last year.
The latest talks come after employers locked out workers in response to what it said was “strike activity” by union members.
The start of the lockout was then followed by several days of no engagement between the two parties, prompting federal Labour Minister Steven MacKinnon to speak with leaders on both sides, asking them to restart talks.
MacKinnon had said that the talks were “progressing at an insufficient pace, indicating a concerning absence of urgency from the parties involved” — a sentiment echoed by several business groups across Canada.
In a joint letter, more than 100 organizations, including the Canadian Chamber of Commerce, Business Council of Canada and associations representing industries from automotive and fertilizer to retail and mining, urged the government to do whatever it takes to end the work stoppage.
“While we acknowledge efforts to continue with mediation, parties have not been able to come to a negotiated agreement,” the letter says. “So, the federal government must take decisive action, using every tool at its disposal to resolve this dispute and limit the damage caused by this disruption.
“We simply cannot afford to once again put Canadian businesses at risk, which in turn puts Canadian livelihoods at risk.”
In the meantime, the union says it has filed a complaint to the Canada Industrial Relations Board against the employers, alleging the association threatened to pull existing conditions out of the last contract in direct contact with its members.
“The BCMEA is trying to undermine the union by attempting to turn members against its democratically elected leadership and bargaining committee — despite the fact that the BCMEA knows full well we received a 96 per cent mandate to take job action if needed,” union president Frank Morena said in a statement.
The employers have responded by calling the complaint “another meritless claim,” adding the final offer to the union that includes a 19.2 per cent wage increase over a four-year term remains on the table.
“The final offer has been on the table for over a week and represents a fair and balanced proposal for employees, and if accepted would end this dispute,” the employers’ statement says. “The offer does not require any concessions from the union.”
The union says the offer does not address the key issue of staffing requirement at the terminals as the port introduces more automation to cargo loading and unloading, which could potentially require fewer workers to operate than older systems.
The Port of Vancouver is the largest in Canada and has seen a number of labour disruptions, including two instances involving the rail and grain storage sectors earlier this year.
A 13-day strike by another group of workers at the port last year resulted in the disruption of a significant amount of shipping and trade.
This report by The Canadian Press was first published Nov. 9, 2024.
The Royal Canadian Legion says a new partnership with e-commerce giant Amazon is helping boost its veterans’ fund, and will hopefully expand its donor base in the digital world.
Since the Oct. 25 launch of its Amazon.ca storefront, the legion says it has received nearly 10,000 orders for poppies.
Online shoppers can order lapel poppies on Amazon in exchange for donations or buy items such as “We Remember” lawn signs, Remembrance Day pins and other accessories, with all proceeds going to the legion’s Poppy Trust Fund for Canadian veterans and their families.
Nujma Bond, the legion’s national spokesperson, said the organization sees this move as keeping up with modern purchasing habits.
“As the world around us evolves we have been looking at different ways to distribute poppies and to make it easier for people to access them,” she said in an interview.
“This is definitely a way to reach a wider number of Canadians of all ages. And certainly younger Canadians are much more active on the web, on social media in general, so we’re also engaging in that way.”
Al Plume, a member of a legion branch in Trenton, Ont., said the online store can also help with outreach to veterans who are far from home.
“For veterans that are overseas and are away, (or) can’t get to a store they can order them online, it’s Amazon.” Plume said.
Plume spent 35 years in the military with the Royal Engineers, and retired eight years ago. He said making sure veterans are looked after is his passion.
“I’ve seen the struggles that our veterans have had with Veterans Affairs … and that’s why I got involved, with making sure that the people get to them and help the veterans with their paperwork.”
But the message about the Amazon storefront didn’t appear to reach all of the legion’s locations, with volunteers at Branch 179 on Vancouver’s Commercial Drive saying they hadn’t heard about the online push.
Holly Paddon, the branch’s poppy campaign co-ordinator and bartender, said the Amazon partnership never came up in meetings with other legion volunteers and officials.
“I work at the legion, I work with the Vancouver poppy office and I go to the meetings for the Vancouver poppy campaign — which includes all the legions in Vancouver — and not once has this been mentioned,” she said.
Paddon said the initiative is a great idea, but she would like to have known more about it.
The legion also sells a larger collection of items at poppystore.ca.
This report by The Canadian Press was first published Nov. 9, 2024.
