Countless companies accross Canada have asked their employees to work from home due to the COVID-19 outbreak.
As a result, many workers are entitled to claim tax relief on some of the costs they incur while working from home.
If you are working from home while in Canada on a working holiday, you may be unsure of how to claim back your expenses.
But don't worry, we're here to help!
In this handy guide, we're going to share everything a working holidaymaker needs to know about claiming working from home expenses in Canada.
I am working from home. Can I claim expenses?
If you work either full time or part-time you may be eligible for tax relief.
The type and amount of expenses you can claim vary and depend on the type of work that you do.
What expenses can I claim when working from home?
Working holidaymakers can claim tax relief on home office expenses, such as:
- electricity, heat and water bills,
- property taxes,
- home insurance,
- license fees,
- Training costs (when upgrading your skills that relate to your employment.)
It's important to note that there are a number of costs which do not count as expenses, such as mortgage interest or capital cost allowance.
How can I claim these home office expenses?
In order to claim work-related expenses, you need a T2200 Form-, (Declaration of Conditions of Employment). This form is completed by the employer and provided to the employee.
On this form your employer must provide details of the expenses you are required to make as part of your work and whether you received any reimbursement for them.
If you work as a tradesperson or an apprentice mechanic, you must include a list of your required tools with your T2200 Form.
Finally, your form must be signed and dated by your employer. Additionally, you must keep all of your relevant receipts and invoices for the eligible expenses for 6 years after the end of the tax year. This is so you can account for the expenses should the taxman ever come calling.
Are there any conditions I must meet to qualify for remote working tax relief?
At least one of the following two conditions should be met in order to claim working from home expenses. In the current circumstances, the majority of working holidaymakers should be able to meet the first condition of mainly working from home.
You have to work mainly from your home (more than 50% of the time). You have a separated workspace in your home which you use only to earn employment income. You also have to use the workspace regularly and for a continuous period of time to meet clients, customers, or other people in the course of your work responsibilities.
How do I file a working from home tax return?
In addition to your T1 annual income tax return, you must also file a Form T777 (Statement of Employment Expenses).
You use this form to calculate how much eligible work-related expenses you can claim.
You're entitled to deduct the part of your costs that relates to your workspace such as your expenses for utilities.
To help you calculate your work-related expenses we have made an example
Working from home expenses = (Size of your workspace ÷ Total home size)*Total eligible expenses
Example: You have completed form T2200 from your employer and use a 6 square meters room in your apartment for an office during the whole year. The total size of the apartment is 60 square meters. The total utilities expenses are $4,000 for the year. So the expenses you can claim for the year according the formula are:
(6÷60 meters)*$4,000= $400
If you worked from home for a limited period of time (for example 3 months) the expenses should be calculated according to the period. The expenses of $400 from the above example should be divided by 12 months and multiplied by 3 month and the amount that can be claimed as a deduction from your income will be $100.
However this calculation method may not be appropriate for all types of costs. For example, you can claim maintenance expenses if the expenses you paid (such as cleaning materials or paint) were used only to maintain your workspace. If a part of these materials were used to maintain a part of your home not used as a workspace, then you cannot deduct any part of them.
What are the guidelines to follow when calculating working from home expenses?
The amount that you can deduct as working from home expenses cannot exceed the amount of your employment income. This means that you are not allowed to use workspace expenses to create or increase a loss from employment on your working holiday.
You can only deduct workspace expenses from the income to which the expenses relate, and not from any other income. Therefore if you had eligible work expenses and form T2200 from more than one employer you have to complete form T777 for each employment income.
If some part of your workspace expenses in the year is not fully deductible in the tax year, you can carry it forward to the next year and claim it on form T777 as long as you are still working for the same employer. However, you still cannot increase or create a loss from employment by carrying forward workspace expenses.
Who can help me to claim my tax entitlements?
If you would like to ensure that you receive your maximum legal tax refund, you should apply with Taxback.com.
Our Canadian tax team will ensure you avail of every tax relief you're entitled to and that you receive your maximum tax refund.
Our average Canadian tax refund is $998 so it's definitely worth claiming back what you're owed!
Our team will take care of all the tricky tax paperwork so you don't have to. We'll even transfer your refund straight to your bank account anywhere in the world!
Why apply with Taxback.com?
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