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02/02/2023

The Tax-Free First Home Savings Account (FHSA)

FHSA eligibility

To be eligible to open an FHSA, you must be an individual resident of Canada, at least 18 years of age, and not turning 72 or older in the year. You must be a first-time home buyer, meaning you, or your spouse or common-law partner did not own a qualifying home that you lived in as your principal residence at any part of the calendar year before the account is opened or the preceding four calendar years.

Contributions and deductions

There is a lifetime contribution limit of $40,000, and an annual contribution limit of $8,000 in any year, including 2023.

You can carry forward up to $8,000 of your unused annual contribution amount to use in a later year (subject to the lifetime contribution limit). For example, if you open an FHSA in 2023 and contribute $5,000, you can contribute up to $11,000 in 2024. Carry-forward amounts do not start accumulating until after opening an FHSA.

It is possible to hold more than one FHSA, but the total contribution amount to all FHSAs cannot exceed the annual and lifetime contribution limits.

Annual contribution limits apply to contributions made within the calendar year. Unlike RRSPs, contributions made within the first 60 days of a calendar year cannot be attributed to the previous tax year. FHSA contributions can be claimed as a deduction against all sources of taxable income. This deduction reduces your amount of taxable income for the year and, ultimately, your taxes payable. The actual tax savings will depend on your marginal tax rate.

If you contribute to your FHSA, you do not have to claim a deduction for that year. Like RRSP deductions, you will be able to carry forward undeducted contributions indefinitely and deduct them in a later year.

Like with other registered accounts, a tax on overcontributions applies to the FHSA for each month or part-month the account exceeds the limit. A 1% tax applies to the highest amount of the excess that existed in that month.

Income and gains

Income as well as capital gains (and capital losses) earned in an FHSA are not included in your annual income (or deductible) for tax purposes. This means income and capital gains can continue to grow and compound in the FHSA on a tax-free basis.

Qualifying investments

Qualifying investments are similar to those held by RRSPs and TFSAs and include mutual funds, exchange-traded funds (ETFs), publicly traded securities, government and corporate bonds and guaranteed investment certificates (GICs).

The same prohibited investment rules and non-qualified investment rules applicable to other registered accounts will apply to the FHSA. These rules disallow non-arm’s length investments and investments in assets such as land, shares of private corporations and general partnership units.

Withdrawals and transfers

Qualifying withdrawals to buy a home are tax-free. To qualify, a withdrawal needs to meet these conditions:

You must be a resident in Canada from the time of the withdrawal to the acquisition of the qualifying home and a first-time home buyer when you make the withdrawal. There is an exception to allow individuals to make qualifying withdrawals within 30 days of moving into a qualifying home.
You must have a written agreement to buy or build a qualifying home before October 1 of the year following the year of withdrawal and intend to occupy the home as a principal place of residence within one year after buying or building it.
The qualifying home must be a housing unit located in Canada.
Funds left over after making a qualifying withdrawal can be transferred to another FHSA or RRSP or registered retirement income fund (RRIF), on a tax-free basis, before the end of the year following the year that first qualifying withdrawal is made. Transfers do not reduce or limit your available RRSP contribution room. Once transferred, the funds are subject to the rules of the applicable accounts, including that the funds will be taxable when you withdraw them from the account.

Withdrawals and transfers do not replenish FHSA contribution limits.

Non-qualifying withdrawals will be included in your amount of income for the year of the withdrawal and taxes will be withheld.

Comparing FHSA and the Home Buyers’ Plan (HBP)

FHSA withdrawals and withdrawals under the HBP can be made for the same qualifying home purchase.

HBP withdrawals are borrowed from your RRSP (interest-free) and must be paid back within 15 years, whereas qualifying FHSA withdrawals are tax-free and do not need to be repaid.

If you do not buy a home within the 15-year FHSA limit, the funds can be transferred to your RRSP tax-free before the end of the 15th year, where they can later be withdrawn under the HBP.

Because a transfer of funds from an FHSA to an RRSP will not reduce your available RRSP contribution room, you can effectively create more RRSP room by starting to contribute to your FHSA.

Closing the FHSA

The FHSA must be closed by December 31 of the year you turn age 71, by December 31 of the 15th anniversary of first opening the account if the funds have not been used to purchase a qualifying home, or by December 31 of the year following the year of the qualifying withdrawal.

Unused funds in the FHSA can be transferred to an RRSP or RRIF on a tax-free basis before the FHSA closure or withdrawn, but the withdrawal will be taxable.

If a withdrawal was made to purchase a qualifying home, unused funds can be transferred to an RRSP or RRIF on a tax-free basis until December 31 of the year following the year of the qualifying withdrawal.

Spousal treatment

Only the FHSA holder can claim a deduction for contributions made to their own FHSA. You cannot contribute to your spouse’s and claim a deduction; however, you can gift funds to your spouse so that they can claim a deduction on their own FHSA contribution. Normally, if you gift funds to your spouse, attribution rules apply so all income earned and capital gains realized on those funds will be attributed back to you and taxed in your hands, but an exception applies to the FHSA that attribution rules will not apply to income earned and capital gains generated within an FHSA derived from these contributions. When the spouse withdraws amounts from the FHSA, only the spouse will need to include the amounts withdrawn in income. No portion of your gifted funds to your spouse’s FHSA would be attributed back to you. Similarly, no attribution arises if you give cash to an adult child to contribute to their FHSA.

In the event of a marriage or common-law breakdown, you may transfer funds from your FHSA to your former spouse’s FHSA, RRSP or RRIF. This will not reinstate an FHSA contribution room for you and would not use any contribution room of your former spouse. If your spouse has overcontributed, the amount eligible for transfer will be reduced.

Treatment on death

You may designate your spouse as a successor account holder. The surviving spouse would become the new holder immediately on death, so long as they meet the eligibility criteria to open an FHSA. Inheriting an FHSA in this way would not impact their contribution limits and would assume the surviving spouse’s closure deadlines. If the surviving spouse is not eligible to open an FHSA, amounts can be transferred on a tax-deferred basis to their RRSP or RRIF or withdrawn on a taxable basis.

If the beneficiary is anyone other than a spouse, the funds will need to be withdrawn immediately following death and paid to the beneficiary. Amounts paid will be included in the beneficiary’s income and subject to withholding tax.

Non-residents

You can continue to make contributions to your existing FHSA after moving from Canada but will not be able to make a qualifying withdrawal as a non-resident. To make a qualifying withdrawal, you must be a resident of Canada at the time of the withdrawal and up until the time the home is bought or built.

Non-qualifying withdrawals as a non-resident are subject to withholding tax.

04/08/2022

New home savings account a “substantial” measure for new buyers
CIBC’s Jamie Golombek breaks down how the new account will work

By: Daniel Calabretta April 7, 202220:03

The federal government proposed something “substantial” for first-time homebuyers in Thursday’s budget with the introduction of a new savings account, says Jamie Golombek, managing director of tax and estate planning with CIBC Private Wealth.

The Tax-Free First Home Savings Account (FHSA) would allow first-time homebuyers to save up to $40,000. Similar to an RRSP, contributions would be tax-deductible; like a TFSA, account withdrawals to buy a first home — including investment income — would be non-taxable.

“This would really be substantial to help people get that down payment for a home, instead of relying on the Home Buyers’ Plan,” Golombek said.

That plan, which allows homebuyers to withdraw from RRSPs to purchase a home, will still exist. “But you can’t do both for the same home,” Golombek said.

The FHSA will have an $8,000 annual maximum contribution limit, and unused contribution room can’t be carried forward.

When the Liberals proposed the savings account in last fall’s election campaign, it came with an age limit of 40. The age restriction was removed in the budget.

Another new detail, Golombek said, is that “you can transfer funds specifically from an RRSP to an FHSA,” subject to the $8,000 annual amount and $40,000 lifetime limits.

“If you don’t buy a home within 15 years, you’ve got to close the account,” he said. “And then, you can actually transfer what’s left into an RRSP or Registered Retirement Income Fund (RRIF), or pay taxes on it, if you choose.”

The government said it would would work with financial institutions to have the accounts available in 2023.

Any Canadian who is over the age of 18 and is a resident of Canada can have an FHSA, as long as they haven’t owned a home in the current year or the previous four calendar years. Canadians would be limited to making non-taxable withdrawals for a single property in their lifetime.

The budget said the government is responding to rising housing prices and Canadians who feel locked out of the market. The national average home price reached a record $816,720 in February, up by more than 20% compared with a year earlier, according to the Canadian Real Estate Association.

The government estimated the new FHSA would provide $725 million in support over five years.

01/20/2022

New tool can point clients toward government benefits
Tool developed by Prosper Canada allows users to “navigate the maze of government information”

By: Staff January 19, 202212:02

Prosper Canada has launched a free online tool intended to simplify the search for government benefits, the national charity announced Wednesday. The tool is meant to help individuals as well as community service providers that help people access income benefits.

Sponsored by TD Bank Group, the Benefits Wayfinder Tool https://benefitswayfinder.org/ provides customized benefit recommendations based on a user’s life circumstances. The tool is available in English or French and presented in plain language.

The tool acts “as a personal guide, helping individuals to quickly navigate the maze of government information and successfully identify benefits they may be eligible for, but not receiving, and how to access them,” said Elizabeth Mulholland, CEO of Prosper Canada, in a release.

Users can search for benefits by their life phase; by completing a brief questionnaire; or by indicating the benefits they’re already receiving, which allows them to see related benefits. Users can also see a full list of government benefits.

The tool also provides users with a list of agencies in their local community that can help them access government benefits, including help to complete benefit applications and to file tax returns.

Your guide to government benefits that can help put more money in your pocket.

12/09/2021

Essential tax numbers: updated for 2022

Use this handy list of tax numbers as a quick reference

By: Staff December 2, 202016:20

Working clients

Maximum RRSP contribution: The maximum contribution for 2022 is $29,210; for 2021, it’s $27,830. The 2023 limit is $30,780.

TFSA limit: In 2022, the annual limit is $6,000, for a total of $81,500 for someone who has never contributed and has been eligible for the TFSA since its introduction in 2009. The annual limit for 2021 is also $6,000, for a total of $75,500 in room available in 2021 for someone who has been eligible since 2009.

Maximum pensionable earnings: For 2022, the maximum pensionable earnings amount is $64,900 (up from $61,600 in 2021), and the basic exemption amount remains $3,500 for 2021 and 2022.

Maximum EI insurable earnings: The maximum annual insurable earnings (federal) for 2022 is $60,300, up from $56,300 in 2021.

Lifetime capital gains exemption: The lifetime capital gains exemption is $913,630 in 2022, up from $892,218 in 2021.

Low-interest loans: The current family loan rate is 1%.

Home buyers’ amount: Did your client buy a home? He or she may be able to claim up to $5,000 of the purchase cost, and get a non-refundable tax credit of up to $750.

Medical expenses threshold: For the 2022 tax year, the maximum is 3% of net income or $2,479, whichever is less. For 2021, the max is 3% or $2,421.

Basic personal amount: The basic personal amount for 2022 is $14,398 for taxpayers with net income of $155,625 or less. At income levels above $155,625, the basic personal amount is gradually clawed back until it reaches $12,719 for net income of $221,708. The basic personal amount for 2021 ranges from $12,421 to $13,808.

Older clients

Age amount: Clients can claim this amount if they were 65 years of age or older on Dec. 31 of the taxation year. The maximum amount they can claim in 2022 is $7,898, up from $7,713 in 2021.

OAS recovery threshold: If your client’s net world income exceeds $81,761 in 2022 or $79,845 in 2021, he or she may have to repay part of or the entire OAS pension.

Clients with children, dependants

Canada caregiver credit: If you have a dependant under the age of 18 who’s physically or mentally impaired, you may be able to claim up to an additional $2,350 in 2022 and $2,295 for 2021 in calculating certain non-refundable tax credits. For infirm dependants 18 or older, the amount for 2022 is $7,525 and the 2021 amount is $7,348.

Disability amount: The amount for 2022 is $8,870 (non-refundable credit; $8,662 in 2021), with a supplement up to $5,174 for those under 18 (the amount is reduced if child care expenses are claimed; $5,053 in 2021).

Child disability benefit: The child disability benefit is a tax-free benefit of up to $2,985 (2022) for families who care for a child under 18 with a severe and prolonged impairment in physical or mental functions. For 2021, the amount is $2,915.

Canada child benefit: In 2022, the maximum CCB benefit is $6,997 per child under six and up to $5,903 per child aged six through 17. In 2020, those amounts are $6,833 per child under six and up to $5,765 per child aged six through 17.

07/23/2021

Potential tax implications from renting a principal residence

By: Vivek Bansal July 22, 2021

Online platforms such as Airbnb have made it easier for people to rent a portion of their homes to earn rental income. If your client is considering dabbling in the rental market using their principal residence, it’s important for them to be aware of the tax implications.

Deemed disposition due to change in use
When your client begins using a portion of their principal residence to earn rental income, a deemed disposition occurs under paragraph 45(1)(c) of the Income Tax Act (ITA).

The deemed proceeds are calculated as the percentage of property converted from personal use to income-producing (based on square footage) multiplied by the property’s fair market value at that time. Any capital gains realized from the deemed disposition are usually exempt from tax if the principal residence exemption is available. Regardless, to avoid penalties your client must report the deemed disposition using Form T2091 and Schedule 3 of their tax return in the year the change in use occurs.

Your client is also deemed to have reacquired the same portion of property at a cost equal to the deemed proceeds. The rented portion of the property is no longer eligible for the principal residence exemption. Therefore, your client must keep track of the new cost base to calculate capital gains accurately on a future deemed disposition or actual sale of the whole property. The special election under subsection 45(2) to extend the eligibility of the principal residence exemption isn’t available when there is only a partial change in use (i.e., only a portion of the property is being rented and the remainder will continue to be used as a primary residence).

To illustrate, let’s look at Jihan’s situation. He owns a home in Toronto with an unfinished basement. Due to a high demand for rental units in his neighbourhood, he decides to renovate his basement into a one-bedroom suite with a separate entrance to earn extra income. Jihan’s basement represents 20% of the total square footage of his home. He purchased the home for $700,000, and it’s valued at $1.5 million.

When Jihan begins to use his basement to earn rental income, he’s deemed to have disposed of 20% of his home for $300,000 (20% × $1.5 million) due to the change in use. If Jihan claims the principal residence exemption on the deemed disposition, his taxable income for the year wouldn’t be impacted.

Jihan’s new cost basis in the home would be $860,000, which is the total of $300,000 from the deemed disposition plus $560,000 for the remainder of the property (80% × $700,000). This cost basis will be used to determine capital gains on a future sale or disposition of the property.

Exception to deemed disposition
There is an exception available from these deemed disposition rules when the following three conditions are met:1

The income-producing use is ancillary to the main use of the property as a residence.

There is no structural change to the property.

No capital cost allowance (CCA) is claimed on the property.
“Ancillary” isn’t a defined term in the ITA but is generally interpreted to mean “subordinate” or “secondary” to the primary purpose. A bright-line test hasn’t been defined in terms of a specific percentage or threshold to determine if the income-producing use is secondary to the primary use as a residence. The CRA reviews the facts in each case to determine if this condition is met.

“Structural change” refers to making the property more suitable for income-producing purposes in a permanent way. For example, installing a separate entry or kitchen, or adding/moving/removing walls or making other changes to convert a portion of the residence into a self-contained unit would take your client offside.

The third condition states that CCA cannot be claimed on the portion of the property used for producing income. If CCA is claimed at any time in the future, the deemed disposition rule would apply retroactively to the time when the change in use occurred.

To ensure that the above three conditions are satisfied, your client should work with their tax advisor before renting their property.

Vivek Bansal, CPA, CA, is director of tax and estate planning at Mackenzie Investments.

1 Income Tax Folio S1-F3-C2, Principal Residence, paragraph 2.59.

05/17/2021

What the disability tax credit means for eligible Canadians and their families

Qualification is a gateway to additional tax savings

By: Rebecca Hett May 14, 202115:13

Federal Budget 2021 proposed expanding eligibility for the disability tax credit (DTC) in the areas of mental functions and life-sustaining therapy. This is welcome news for thousands of Canadians who didn’t previously qualify. Not only does DTC eligibility offer immediate tax savings, but it opens the door to other tax benefits and programs to assist eligible Canadians with disabilities.

What is the disability tax credit?

The DTC is a non-refundable tax credit intended to reduce income tax payable for people with a disability and/or those who support them. It consists of the disability amount (base amount) for eligible individuals of any age and the supplement for children with disabilities who are under 18 at the end of the tax year (supplemental amount).

Both amounts are indexed annually and have a provincial counterpart to the federal amount. The federal portion is the same for every eligible Canadian, while the provincial/territorial amounts vary by jurisdiction.

The DTC can be claimed by the eligible individual, those supporting them or both.

Where someone qualifies for the DTC for a particular year, those claiming the credit can request their income tax returns be adjusted as far back as 10 years to claim the DTC.

How do you apply for the DTC?

The Canada Revenue Agency (CRA) Form T2201 Disability Tax Credit Certificate must be completed by a medical practitioner to certify that the individual has a severe and prolonged impairment. The medical practitioner should be asked to indicate on the form the earliest start of the condition, so that the DTC may be claimed for prior years where applicable.

The completed T2201 is then submitted to the CRA, which will assess qualification for the DTC based on the form. Read CRA’s Eligibility for the Disability Tax Credit for more details about eligibility and how to complete Form T2201.

How is the DTC calculated?

Each government allows taxpayers to reduce their taxes payable by a percentage of their non-refundable tax credits. The federal government rate is 15%, and the federal DTC is calculated by multiplying the base amount by 15%.

In certain situations where total child care and attendant care expenses claimed for the child exceed certain thresholds, the supplemental amount may be reduced. Where there is no reduction to the supplemental amount for the tax year, the maximum tax credit available in respect of the supplemental amount is also 15%.

For more information on how the DTC is calculated, read the CRA Disability Tax Credit Folio.

For 2021 the federal base tax credit is $1,299, and the maximum federal supplement credit is $758, for a total federal tax savings of $2,057.

The provincial and territorial amounts are in addition to the federal credit. They are calculated in the same manner as the federal credit, but the credit amounts and applicable tax rates vary by jurisdiction.

For example, the table below shows that Alberta’s provincial base credit offers an additional $1,494 in tax savings plus $1,121 where the maximum supplement is available. For 2021, this means that for a family in Alberta with a child under age 18 who qualifies for the DTC, the combined federal and provincial tax savings from the disability tax credit and supplements can be as high as $4,672.

Other benefits and planning tools
Qualification for the DTC is a gateway to accessing other tax benefits, credits, deductions and planning tools, including the following:

Child disability benefit (CDB)

A tax-free monthly payment for parents of a child under 18 who qualifies for the DTC and who also qualifies for the Canada child benefit. The CDB is calculated annually based on prior year adjusted family net income and begins to reduce when that income exceeds $68,708.1 Where the child qualifies for the DTC, the parent will automatically receive the CDB based on the prior year adjusted family net income.

Claims for certain medical expenses

Claims for attendant care or care in a nursing home require that the individual who requires care qualifies for the DTC.

Canada caregiver credit

A non-refundable tax credit available to Canadians who support a spouse or common-law partner, or other dependent with a physical or mental impairment. Where the dependent qualifies for the DTC, a letter from a medical practitioner isn’t required.

Disability supports deduction

A deduction from income for eligible expenses paid to work, carry on a business or go to school. Unlike the disability tax credit and the medical expense tax credit where certain support people may claim the tax credit, the disability supports deduction may be claimed only by the eligible individual.

Registered disability savings plan (RDSP)

A tax-deferred savings plan designed to help families save for a beneficiary who is eligible for the DTC. RDSP contributions2 are not tax deductible and can be made until the end of the year in which the beneficiary turns 59. Contributions that are withdrawn aren’t included as income to the beneficiary when they are paid out of an RDSP. However, Canada Disability Savings Grants and Bonds, RDSP income, and gains and rollover proceeds are included in the beneficiary’s income for tax purposes when paid out of the plan.

Qualified disability trust (QDT)

Created in 2016 as part of the changes to taxation for testamentary trusts (trusts set up by a will). The qualifying beneficiary must be eligible for the DTC. The QDT is an exception to new rules that all testamentary trusts are taxed at top marginal rates. A QDT has access to the graduated tax rates that previously applied to all testamentary trusts.

Preferred beneficiary election (PBE)

Available to certain trusts with one or more qualifying beneficiaries who are eligible for the DTC. Where a PBE is jointly made by the trustee and beneficiary, trust income may be taxed in the hands of the preferred beneficiary but may continue to accumulate inside the trust.

Conclusion

DTC qualification is a critical tax-saving opportunity for recipients and their families. Further, the suite of planning tools that become available where someone qualifies for the DTC is an opportunity for advisors to discuss with their clients what may be suitable for their circumstances.

A note of caution:

Requesting that tax returns for prior years be adjusted to claim the DTC and associated tax credits and deductions — in particular, requesting adjustments outside the normal three-year re-assessment period — exposes those tax years to possible audit. The client should ensure they’re very comfortable with their filing position on all matters in respect of impacted prior tax years.

Rebecca Hett, CPA, CGA, TEP, is vice-president, Tax, Retirement and Estate Planning at CI Investments.

The lifetime maximum contribution amount to an RDSP for a particular beneficiary is $200,000.

02/09/2021

How to deduct home office expenses

By: Rebecca Hett February 4, 2021

For employees working from home during Covid-19, the Canada Revenue Agency (CRA) has expanded eligibility and simplified the requirements to claim home office expenses.

Home office expenses include “work-space-in-the-home expenses” such as utilities and home maintenance as well as certain office supplies and phone expenses (see the table below). Both salaried and commission employees1 working from home due to Covid-19 may be eligible to claim these expenses as deductions on their 2020 T1 income tax and benefit returns.

Employees must have worked from home in 2020 due to Covid-19 for more than 50% of the time for at least four consecutive weeks.

The CRA’s new, temporary flat-rate method allows a deduction of $2 per day to a maximum of $400 for eligible employees. The employee may not claim any other type of employment expenses, such as parking and gas, but they can be partially reimbursed for some home office expenses and still claim the $2-per-day deduction.

Employees choosing to deduct home office expenses using the CRA’s new flat-rate method aren’t required to maintain receipts or other supporting documents, or to determine the size of their workspaces.

Employment contracts don’t need to reference the requirement to work from home, and the employer doesn’t need to complete CRA Form T2200S. The employee simply completes option 1 of the new Form T777S and claims the deduction, calculated on line 9939 of the form, on line 22900 of their 2020 T1 and attaches the form to their 2020 T1.

Under this method, days worked from home include full-time, part-time or overtime hours but don’t include vacation days, sick days, days on leave or statutory holidays.

The CRA’s detailed method is available for those who wish to claim the actual amount of home office expenses they paid and/or want to claim other types of employment expenses (see the list of eligible expenses in the table). This method will be of particular interest to employees who rent their homes (the portion of rent related to the home office is deductible, but no portion of a mortgage payment is deductible).

To use the detailed method, employer requirements to work from home in 2020 don’t have to be part of employment contracts and may be via written or even verbal agreements. Employees can claim expenses for which they weren’t reimbursed and didn’t receive an allowance.

For example, where an employer reimbursed internet costs, the employee may still make a claim for the work-in-home portion of rent and utilities.

Where an employee worked from home in 2020 due to Covid-19 and was required to pay only home office expenses, the detailed method requires that the employer complete, sign and provide the employee with a simplified Form T2200S.

Where the employee was also required to pay for other employment expenses, the employer must provide the employee with a completed and signed Form T2200.

Forms T2200/2200S don’t need to be submitted to the CRA but must be kept on file. Employees must keep receipts, determine the size of their workspace and complete simplified Form T777S (option 2) and attach it to their 2020 T1. Employees claiming other employment expenses must complete Form T777 and attach it to their 2020 T1.

The new rules don’t impact self-employed individuals claiming business-use-of-home expenses using Form 2125.

Table: Detailed method for home office expenses

Eligible expenses

Rent paid
Utilities (heat, electricity, water)
Utilities portion of condominium fees
Maintenance (minor repairs, cleaning supplies, light bulbs, paint, etc.) for workspace or common areas needed to use the workspace
Home internet access fees (cost of plan must be reasonable)
Office supplies (folders, highlighters, envelopes, ink cartridges, toner, notebooks, paper or binder clips, pens and pencils, specialty paper, stamps, postage, stationery, sticky notes)
Phone expenses (basic cellphone plan for employment use with reasonable data and minutes, as well as long distance charges)

Employees who earn commission incomes can also claim:

Property taxes
Home insurance
Lease of a cellphone, computer, laptop, tablet and fax machine that reasonably relate to earning commission income

Non-eligible expenses

Capital cost allowance
Mortgage interest
Principal mortgage payments
Capital expenses (renovation costs, replacing windows, flooring, furnace, etc.)
Internet connection fees and portion of internet plan costs related to lease of modem or router
Office equipment (printer, fax machine, briefcase, laptop case or bag, calculator, etc.)
Office furniture (desk, chair, etc.)
Monthly basic rate for a landline telephone
Cellphone connection or license fees
Purchase of cellphone, computer, laptop, table, fax machine, etc.
Computer accessories (monitor, mouse, keyboard, headset, microphone, speakers, we**am, etc.)
Other electronics (television, smart speaker, voice assistant, etc.)

Note that neither salaried nor commission employees can use home office expense claims to create or increase loss from employment

For 2020 the CRA has also said it won’t consider it a taxable benefit if an employer reimburses an employee up to $500 for things like computer equipment and office furniture. The same goes for certain parking and travel expenses related to increased commuting costs that employees incurred due to Covid-19.

Advisors should speak to tax experts to confirm the optimal approach for clients claiming home office expenses and access to non-taxable benefits for 2020.

Rebecca Hett, CPA, CGA, TEP, is vice-president, Tax, Retirement and Estate Planning at CI Investments.

1 Commission employees typically have income amounts in box 42 of their T4 slips.