For the 2020 and 2021 tax years, Canadians were allowed a special Work-From-Home credit for time spent working from home during the Covid-19 pandemic.
The credit can be calculated two ways: using a flat rate, or doing a calculation involving a percentage of utilities and/or rent costs.
The flat rate requires no additional documentation. Any employee who worked from home can take a flat deduction of $2/day for every business day worked from home.
The calculated version requires a completed and signed T2200s form from the employer, certifying that the worker was required to work from home during the year.
Based on the comparisons we have done for our clients, we have found that home owners, as opposed to renters, get no additional benefit from using the calculation to claim the credit. This is due to a number of key housing expenses incurred by homeowners (mortgage interest, property tax) being disallowed as part of the Work-From-Home calculation.
Renters, on the other hand, can sometimes obtain a larger credit via calculation than the flat rate. This is because the main housing expense for renters (rent) is allowed in the Work-From-Home calculation, and the calculation often exceeds the flat rate.
Note that self-employed individuals who typically claim business-use-of-home should take the business-use-of-home deduction instead of the Work-From-Home deduction, as explained in this blog post.
Personal Tax Advisors’s recommendations:
Self-employed individuals: do not take the Work-From-Home deduction but claim the business-use-of-home deduction instead if possible.
Employees who own their home: use the flat rate. No need to obtain a T2200s from the employer.
Employees who rent: Obtain a signed T2200s from the employer so as to be allowed to use the calculation method.