Human Resources Legislative Update
Employment Expenses: Updated Process and T2200 Form
Date: February 14, 2024
The Canada Revenue Agency (CRA) has published revised guidance on the process for claiming home office expenses for the 2023 taxation year just in time for tax season.
The CRA has confirmed that the two temporary methods for claiming deductions for home office expenses—form T2200S, “Declaration of Conditions of Employment for Working at Home Due to COVID-19,” and the “temporary flat rate method”—that were available for the 2020, 2021 and 2022 tax years do not apply for 2023. The CRA has indicated that the requirements are reverting to the pre-pandemic process but has announced important changes that employers should understand when asked by employees to complete the applicable claim forms.
What’s New for the 2023 Tax Year?
Employers will need to provide a completed and signed form T2200, “Declaration of Conditions of Employment,” in order for employees in provinces and territories outside Québec to be able to claim home office expenses and/or other employment expenses for the 2023 tax year. The T2200 form has been updated for 2023. The revised form allows employers to skip a number of sections if the only employment expenses the employee is claiming for the year are home office expenses.
Like the prior version of the form, the 2023 version of the T2200 asks employers to confirm if they required the employee to use a part of their home for work, either in the employment agreement or in a written or verbal agreement between the employer and employee. CRA guidance on eligibility for home office expense deductions published on February 2, 2024 states, “[f]or 2023, if an employee has voluntarily entered into a formal telework arrangement with their employer, the employee is considered to have been required to work from home.” While “formal telework arrangement” is not defined in the guidance, the CRA suggests that an employee will be considered to be “required” to work from home where, for example, it is agreed that an employee will work from home three days each week during the year, or where it is agreed the employee will work an alternating schedule of three weeks at home and one week in the office. It is not necessary for the employee to work entirely from home in order to claim home office-related employment expenses.
The CRA released publication T4044, “Employment Expenses 2023,” which includes revised guidance on employees’ eligibility to deduct home office expenses. In it, the CRA states that full- and part-time employees can deduct eligible home office expenses they incurred (and which were not reimbursed) if they meet two conditions:
- The employee worked more than 50% of the time from home for a period of at least four consecutive weeks.
- The expenses were directly related to the employee’s work.
These conditions are consistent with the rules that were in place previously with respect to employees who were working at home due to COVID-19.
The CRA will now accept an electronic signature on the T2200 form.
Impact on Employers
The proliferation of remote work arrangements has driven increased employee interest in deducting home office expenses. As we enter tax-filing season, employees may request that their employers provide completed T2200 forms to enable them to claim tax deductions for home office expenses and/or other employment expenses.
The CRA generally expects employers to provide a completed T2200 form for employees who meet the criteria and request one. Employers should not provide the form unless it is clear the conditions have been met and employers should be satisfying themselves of this on a case-by-case basis.
If you have any questions regarding the T2200 form and employers’ obligations to assist employees in claiming deductions for employment expenses, please contact your regular Hicks Morley lawyer or any member of the firm’s Pension, Benefits and Executive Compensation group.
The article in this client update provides general information and should not be relied on as legal advice or opinion. This publication is copyrighted by Hicks Morley Hamilton Stewart Storie LLP and may not be photocopied or reproduced in any form, in whole or in part, without the express permission of Hicks Morley Hamilton Stewart Storie LLP. ©
