Canadians working from home can receive a $400 tax credit

Dec 1 2020, 4:38 pm

It looks like people working from home due to the COVID-19 pandemic will be able to get a new personal income tax deduction of $400.

The federal government announced on Monday a new pandemic recovery plan, which contains about $100 billion of spending.

In the new plan, Canadians will be able to deduct $400 under a simplified Home Office Expense Deduction on their 2020 income tax return.

In the new budget, the government says people “are turning their bedrooms, basements and kitchens into offices, and taking on increased household expenses to do their jobs. Canadians working from home can already deduct certain home office expenses for tax purposes, but first-time claimants may not be familiar with the rules and the claim process imposes an administrative burden on employers who are already dealing with the broader impacts of the pandemic and have to fill out additional information for their employees who qualify.”

In order to simplify the process for both taxpayers and businesses, the Canada Revenue Agency (CRA) will allow employees working from home to claim up to $400 based on the amount of time working from home, without the need to track detailed expenses. Nor will the government require a signed form from their employers.

Further detail will be communicated by the CRA in the coming weeks.

Also part of the recovery plan is a $1 billion long-term care fund that will be distributed to provinces to make care homes safer for seniors. Finance Minister Chrystia Freeland also added businesses in tourism, hospitality, and the arts would have access to new government-backed loans recognizing that these sectors have been disproportionately impacted by the pandemic.

Ottawa is also raising the wage subsidy for businesses back to 75% of pre-pandemic wages, as many businesses head into a tough winter.

The government will also invest in job training, particularly in the care sector, broadband internet, and rapid housing.

Note: This article’s headline has been updated to reflect a correction.

Clarrie FeinsteinClarrie Feinstein

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