What you need to know for tax filing season: updates to Form T2200
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In January 2024, the Canada Revenue Agency (CRA) updated Form T2200, Declaration of Conditions of Employment, for the 2023 tax year, making it easier to complete for employees who are claiming a deduction for home office expenses. This updated form also eliminates the temporary flat rate method including Form T2200S, Declaration of Conditions of Employment for Working at Home Due to COVID-19.
In 2020, the CRA had introduced the temporary flat rate method to make it easier for employees working from home due to the COVID-19 pandemic to claim home office expenses. There were limited criteria for this temporary flat rate method and no documentation was required. The temporary flat rate method was extended for the 2021 and 2022 tax years.
The CRA announced in 2023 that, “the temporary flat rate method for home office expenses does not apply to the 2023 tax year. Eligible employees who worked from home in 2023 are required to use the detailed method to claim home office expenses.”
Looking to dive deeper? Check out the federal government’s explanation of these updates here: Home office expenses for employees - what the changes are.
What do employers need to do if employees want a T2200?
If requested by an employee who meets the eligibility requirements – particularly the one that they were required to work from home – the employer must complete the T2200 form and give it to the employee so that the employee can deduct employment expenses from their income.
In order to meet eligibility requirements for a T2200, the CRA indicates that an employee must meet all of the following conditions:
- The employee was required to work from home. For 2023, the requirement does not have to be part of their employment contract and may be a written or verbal agreement at minimum.
- The employee was required to pay expenses related to the workspace in their home (for example, utilities, internet, or rent). Commissioned employees can also claim a portion of home insurance and property taxes. Expenses that were or will be reimbursed by the employer can’t be claimed. To see a complete list of expenses that can be claimed, please visit: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-22900-other-employment-expenses/work-space-home-expenses/expenses-can-claim.html#h-2-1.
- The employee’s home workspace is where they work for more than 50% of the time for a period of at least four consecutive weeks in the year. For examples and more details on calculating an employee’s home workspace, please visit: https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-22900-other-employment-expenses/work-space-home-expenses/work-space-use.html.
- Employee expenses are used directly in their work.
- The employee has obtained a completed and signed copy of Form T2200, Declaration of Conditions of Employment, from their employer. It’s up to the employer to determine who’s authorized to sign these forms. It’s the responsibility of the employee to maintain all appropriate supporting documentation/records, including invoices and receipts, in the event of an audit.
Did you know that you can use Payworks' HR module combined with Employee Self Service to securely upload and distribute T2200 forms to your employees? Deliver confidential documentation through Personal Documents in Employee Self Service.
Resources for employers in completing Form T2200
For employees who still require a T2200 form, the CRA recommends consulting:
- Guide T4044, Employment Expenses.
- Archived Interpretation Bulletin IT-352, Employee’s Expenses, Including Work Space in Home Expenses.
- Archived Interpretations Bulletin IT-522, Vehicle, Travel and Sales Expenses of Employees.
Explore the CRA’s payroll resources here.
Payworks recognizes that compliance is critical and that the Canadian legislative landscape is ever-changing. We’re here to help – after all, whether it’s knowledgeable support, innovative solutions or an extensive library of resources, we understand what it takes to be a Canadian employer. Explore the federal and regional legislation applicable to your employees through our Payroll Guide for Canadian Business. Download it today, free of charge: https://www.payworks.ca/landing-pages/campaigns/payroll-guide.
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