Do you have a primary business office, but also meet clients and have a secondary office at home? As an employee or a commissioned sales representative, you may work from more than one location – the employer’s business establishment and your home office.
When you have more than one location and want to claim your home office expenses, the first thing you have to establish is whether your home office is your only office or your secondary office.
There are many taxpayers who are supplied an office however are also required to work from home and do the majority of their business from home (i.e. make calls, meet clients, prepare paper work, advertising, marketing, etc.).
The work space is where you mainly (more than 50% of the time) do your work.
The work-space is only used to earn employment income. It is used on a regular and continuous basis for meeting clients or customers.
For example: if you occasionally work at home and use the kitchen table as your desk, it is not considered deductible as it is used for other activities; however, if you have a spare room that you have designated as a home office, only use it as an office and regularly use it to perform the tasks required to do your work and/or to meet clients, you may be eligible to deduct your home office expenses.
To claim home office expenses, you are required to have a completed and signed T2200, by your employer. When completing your tax return, form T777 is used for your Employment Expenses.
For Employees, home office expenses may include:
- repairs & maintenance (does not include renovations)
- strata fees
For Commissioned Employees, home office expenses may include:
- all of the above
- property taxes
- home insurance
The percentage of expenses you can claim for your home office is based on the square footage of your office in comparison to your total home.
For example: If your home office or work space in the home is 200 square feet and your total home is 2000 square feet, then 200 / 2000 = 0.10. This shows that 10% of your total expenses are eligible for deduction.
Just remember, the expenses cannot exceed the income you have earned from employment or commissions. If they do, they will be carried forward to the following year. These expenses must be reasonable and can only be deducted from the related employment income and not any other income you may have earned. If you have a party to which clients are invited and they hop in your hot tub, you cannot claim “hot tubbing” expenses!!
***This blog is for information only and not to be used as tax advice or planning without first seeking professional advice. Information is subject to change without notice.