In case you are required to use your home space for job, you can claim home office expenses as an expense deduction from your employment income, provided that such expenses are not reimbursed to you by your employer. To claim your work from home expenses, you must either use your home office space regularly for work purposes, such as meeting with customers, contractors / vendors or work from home for at least 50% of your work time.
Until 2022 there were two methods of claiming such expenses i.e. (i) The Flat Rate method and (ii) Detailed Method. Flat method was simple method which allowed to claim home expenses at the rate of $2 for per day ($500 per annum) as home expenses in T1. But at the start of 2023, the flat method has been discontinued and you must use the detailed method to claim your home office expenses. Here’s how to calculate your eligible home office expenses:
- Calculate Home-Office Space: Determine the space which is used for work as compared to the total area of your home. For example, if your total area of the home is 700 sq. ft. and out of that you are using 175 sq. ft., your home-workspace is 25% of the total area of your home area.
- Identify the type of home-space:
- A Designated Room: If you are using a dedicated office space i.e. a room or a den etc. and the area of said room / den is 175 sq. ft. (as mentioned above), you may claim proportional expenses of such office space based on the percentage you have calculated above at step 1 (25% in the above example).
- Common Area: If you are using a shared space, then in such as case your claim for the home expenses in T1 shall be further restricted / limited based on the proportion of time used for work. For instance, if you use a 175 sq. ft. common area for work 42 hours a week out of 168 total hours, you can claim 6.25% (25% of 25%).
- Eligible Expenses i.e. Examples of few Expenses which can be deducted
- Rent of the house
- Utilities like electricity, heat, water etc.
- Home Internet Expenses
- Expenses incurred towards minor repairs and maintenance
- Additional Expenses for Commission employees
- Property Taxes
- Insurance payments for the home
- Lease payment for laptop and mobile phones etc.
There are specifically certain expenses which are not allowed to be claimed:
- Expenses in the nature capital expenditure like furniture and fixtures, electrical Equipment etc.
- Major repairs of the home
- Mortgage and interest payments of the home etc.
Disclaimer: The above article is not exhaustive and does not contain all possible legal points. Further, the Laws may change and interpretation may differ by situation and over the period of time. The above is generic information and must not be taken as a legal opinion / advice. For detailed information, Readers should consult CRA website.
Original Source: https://blog.spacehey.com/entry?id=1233933
