Looking for guidance on how the new home office rules work. Has anybody seen anything official that would fit this situation?
I have a client that was home from May 1st onwards. She can claim either the $2/day (which I am assuming doesn’t include weekends/holidays) or the detailed calculation on her heat and water only pretty much since she is not a commissioned employee. This works out to less than the $2/day so all things being equal I’d tend to claim under the simplified method.
My problem however is internet fees. It looks like you are supposed to claim the whole internet bill under the detailed method and it then prorates the expenses. This doesn’t come out to much and would still be under the $400 for the simplified method.
My problem and question is - the client had to pay an additional $440 in internet fees over and above their base home internet to get the speed up to the level needed to work from home. Do I claim the $250 or so under the detailed method plus $440 for internet costs as 100% work related (preferred obviously but not certain I can do this) or do I have to use the entire internet bill for the year prorated for office size and 75% of the year like the heat and water? Can I claim the $400 for home office and the $440 for additional internet? This seem last seems to be a stretch but thought I’d ask.
It is the difference between $295 (detailed method including internet), $400 (basic method), $440 (Internet only) $687 (detailed method not including internet plus $440) or $840 (Basic method plus $440) which is not a huge difference in taxes in the overall scheme of things but I would like it to be right. I think the $687 is reasonable for 8 months of home office use but I can’t find any guidance to tell me which method I am supposed to be using.
Sorry Laurie I’m having trouble following your math. I’m not sure what you mean when you say $400 for the “basic method”. There is a temporary “flat-rate method” of $2 per working day where no receipts and no T2200 is required. From May 1st, that would only be approx $320. And then there is the “detailed method” which requires an employer signed T2200s where the taxpayer can claim: Electricity, heat, water, minor maintenance and repairs and home internet. The footnote for home internet clearly states that it cannot include any set up fees or modem rental. And yes you will need to allocate only the portion used for employment. A reasonable method would be based on square footage of the home. I’m not sure if CRA would accept an argument as to using a larger percentage for internet. In my home it would be hard to argue since my kids are logging in to online school all day and Netflix has been streaming all night and weekend!
I hadn’t actually worked out the work days between May 1st and Dec 31st. Just substitute $320 for $400 above. What I am trying to figure out is if I can claim the internet costs over and above the basic internet as 100% work from home related similar to say envelopes purchased for working from home.
Hi Laurie,
I just came across this on CPA Canada’s tax blog. It might help you:
Claiming home internet access fees
One common question that has arisen is how to calculate the amount of internet access fees that relate to employment. The CRA’s calculator prorates these costs based on the workspace percentage.
The CRA has confirmed that if an employee wants to use a different method to calculate the employment-use portion of their home internet access fees, they must ensure to meet all the following conditions:
the cost of the internet plan is reasonable
the cost of the internet plan has been divided between employment and personal use on a reasonable basis
the employee is able to substantiate the amount of data used directly in the performance of their employment duties
The employee should include the employment-use portion of the fees calculated under “other expenses” on line 9270 of the T777 or T777S forms. In addition, if using the online calculator, the home internet fees should not be included in the box “Total electricity, heat, water and home internet access fees you paid from” as this total number will be prorated by the workspace at home allocation. As with all other expenses claimed, employees should ensure they maintain appropriate supporting documentation.