With remote work comes employment expenses (and T2200)
Full-time remote work is increasingly becoming the norm, but so are daily home office expenses for remote workers. Many of these expenses aren’t exactly optional, either. Things like home internet, office supplies - even vehicle costs - can all come as part of a worker’s ongoing employment with your company.
So, as an employer of Canadian remote talent, what is your level of responsibility when it comes to their employment expenses? Can your remote workers claim those expenses come tax time?
We’ll answer both those burning questions right now.
Employment expenses? Yes, there’s a tax form for that!
You can fill out a T2200 (Declaration of Conditions Employment) form for your remote employees. The T2200 - brought to you by the fine folks at the Canada Revenue Agency - is intended for employees who want to deduct employment expenses from their income at tax time.
Are you responsible for filling out your employees’ T2200 forms?
The short answer is – no. There is actually no legal requirement whatsoever by the CRA for you to provide or fill out a T2200 form.
But – and this is a big “but,” - it doesn’t cost you anything to make your remote employees aware of the T2200 and fill out the form. Think of it as doing your part to promote workplace morale and cohesion.
Can any remote employee fill out a T2200?
T2200s should be filled out for any employee that’s required to pay expenses in order to earn their employment income.
But it’s far from a free-for-all! Employees wanting to claim expenses with a T2200 need to meet the following conditions:
- Your employees must be salaried, not freelancers or otherwise self-employed.
- You, as the employer, require the employee to work from home.
- The employee works from home more than 50% of the time for at least four consecutive weeks in the year, OR the employee uses their home office on a regular basis for meeting clients, customers, etc., in the course of their employment.
- The employees’ expenses are used directly in the performance of their work.
What kinds of employment expenses are eligible?
Your remote employees can claim a fairly wide range of expenses on their T2200 form, including:
- Travel expenses - such as meals, hotel stays and flights.
- Vehicle costs - employees should maintain a logbook of the mileage driven to earn their income, as well as the total mileage driven in the tax year for both work and personal purposes.
- Office supplies - think consumables like ink cartridges, pens, paper, etc. Note: Office chairs, desks, computers, etc., are considered capital expenses and not eligible for the T2200.
- Home workspace expenses - for example, if your workspace takes up 20 percent of your square footage, you can claim 20 percent of hydro, property taxes, insurance, etc.
- Office rent - if you need to rent a space to meet clients/customers.
For more information on which expenses may be claimed, you can check out the CRA’s guidelines, as well as Québec’s eligible employment expenses guide.
Is any other documentation or proof required?
Employees who live in Québec require a TP-64.3-V, outlining general employment conditions. An employee's province is determined by the location of their primary residence.
Bridgewater TI: Your remote employment experts
We help you get the best remote candidates onboard quickly and seamlessly. How? By helping your business navigate every payroll, tax and HR detail - so you can stay focused on what makes your business great.
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The information provided is for general informational purposes only and does not constitute tax advice. Please consult with a qualified tax advisor for advice tailored to your specific situation.
