Work-from-home tax credit: What Canadians can claim for 2023 - MoneySense (2024)

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Work-from-home tax deduction in Canada

Canadian taxpayers can claim a tax deduction for home-office expenses. This differs slightly from a tax credit, Imtiaz. A tax credit, such as those you get for medical expenses or donations, can be claimed to reduce your income tax payable. It is generally 15% to 20% of an eligible expense, depending on your province or territory of residence.

A tax deduction is often better than a tax credit because it reduces your taxable income. When you decrease your taxable income, you may save 15% to 54% tax depending on your income and where you live.

What can you claim for working from home in 2023?

The Canada Revenue Agency (CRA) introduced a temporary flat-rate home-office expense deduction for the 2020, 2021 and 2022 tax years. Last year, a taxpayer could claim $2 per day worked from home, up to a maximum of $500, as a deduction.

This simplified method is no longer available for 2023. The detailed method for claiming home-office expenses now applies for all eligible employees, Imtiaz, so you can still claim a deduction if you qualify. In order to be eligible to claim home-office expenses, an employee must:

• Be required to work from home by their employer
• Work primarily (more than 50%) of the time from home
• Have a completed Form T2200 Declaration of Conditions of Employment

Visit the CRA’s website for detailed eligibility criteria.

How to claim the work-from-home expense deduction for 2023

Some employers may need a reminder to provide Form T2200s to their employees for 2023. So, if you think you qualify and do not receive the form along with your T4 slip, it may be worth raising this with your employer.

You can claim a pro-rated percentage of the following expenses:

• Electricity
• Heat
• Water
• Utilities portion (electricity, heat, and water) of your condominium fees
• Home internet access fees
• Maintenance and minor repair costs
• Rent paid for a house or apartment where you live

You need to determine your workspace use by calculating the size of your workspace relative to all finished areas of your home. This percentage applied to your eligible expenses becomes your home-office expense deduction, Imtiaz.

When sharing a workspace

If the workspace is a shared area used for work and personal use, or if it is shared by more than one person who works from home, you may need to further reduce the eligible percentage of your home-office expenses that can be claimed. Visit the CRA’s website for information on how to determine the type and size of your workspace.

If you’re a commissioned employee, Imtiaz, whether paid fully or partially by commissions, you may also be eligible to claim:

• Home insurance

• Property taxes

• Lease of a cell phone, computer, laptop, tablet, etc., that reasonably relates to earning commission income

Self-employed home office tax deduction

Self-employed workers can claim home-office expenses as well. They can claim mortgage interest in addition to the expenses claimed by salaried and commissioned employees. Home-office expenses for a self-employed taxpayer cannot be used to create a net business loss if their expenses exceed their income. Home office expenses can only be used to reduce net business income to zero. Any excess expenses can, however, be carried forward to use in the future against net rental income.

In summary, Imtiaz, if you qualify by working primarily from home, you can probably claim home office expenses again this year. You will need to do a bit more work to pull together the required documentation and figures to do so, but you may also find your deduction is higher and saves more tax compared to previous years.

Read more about filing your taxes:

• Can you file multiple years of income taxes together in Canada?
• Self-employed? Here’s how to file taxes for a side hustle
• How to fill out a personal income tax return for 2023
• How to file your taxes online in Canada