5 Tips to Save Taxes in Canada in 2024 !!

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Home Office Expenses - Deduction under Income Tax Act, Canada

Home office expenses – Since pandemic, working from home is the new norm. Lot of companies are still allowing their employees either to work fully on a remote basis or on a hybrid model. So, this deduction is for those employees who are mostly working from home. Until 2022, there was a temporary flat method available as per which you could claim $2 per day deduction subject to a max of $500 for the year. However, that has changed since 2023 and is not available any more. Now, one can apply deduction under Detailed Method.

• Let us understand the Eligibility for this - You need to work from Home more than 50% of the time for 4 consecutive weeks during the Year based on written or verbal agreement with Employer. If you are an employee who has to work from home for 3 days out of 5 working days for at least 4 consecutive weeks, you are eligible as you meet the threshold ( 3/ 5 = 60% which is greater than 50% threshold requirement).

• Expenses you may deduct - proportionate share of the cost of electricity, heating, water, cleaning, maintenance, internet access fees, proportionate rent

• One needs to determine the area of the work space and total area of your home including all finished areas and then apply the % of your home that you are using for work space. For Example, if your total home area is 1000 sq feet and your office space area is 100 sq ft., then you can apply 10% to all these expenses as eligible expenses under this category.

• As a homeowner, you can’t deduct notional rent, mortgage interest, insurance or property tax unless you are a commission salesperson

• Certification - Your employer must certify Form T2200 : Declaration of Conditions of Employment that you were required to pay for these expenses and were not reimbursed for the related costs