If you have spent a majority of your time working remotely from home, you may be eligible to deduct home expenses from your employment income. Expenses including electricity, office supplies, utilities, internet fess, and more could all be deducted from your employment expenses.
As a remote-first Employer of Record (EOR) service, we’re familiar with the T2200 expense form and helping our clients with expense reporting. We’ve prepared a primer for those of you who are new to the subject to explain how T2200 forms work and how you can use them in your business, especially if you have remote Canadian workers.
First, a disclaimer: CPS does not provide tax advice services and this blog should only be considered a brief introduction to the form. Questions about how you should prepare for the next tax season and what you are entitled to claim are best addressed by an accountant.
What Is the T2200 Tax Form in Canada?
The T2200 form, also referred to as the Declaration of Conditions of Employment in Canada, is a supplemental tax form that does not need to be filed with your return. If you work from home, your employer should provide you with a T2200 that lists expenses both reimbursed to you as taxable and nontaxable, as well as any allowances you had.
T2200s are usually issued alongside T4s. You should review the form with your accountant before saving it in your files, as you may need to request clarifications or corrections.
The first and most important question on the form is “Did this employee’s contract require them to pay their own expenses while carrying out the duties of employment?” If the answer is “no,” then you’re not entitled to claim employment expenses and you can stop worrying about T2200s! If the answer is yes, then you are entitled to claim some employment expenses and you should expect a T2200 from your employer.
Question 10, “Did this employee’s contract of employment require them to use a portion of their home for work?” is where your employer will outline how much time you spent working from home.
Do Employers Really Have to Provide T2200s?
Yes. Employers that require their staff to work from home or on the road are required to provide T2200s. Businesses with commission-based sales departments, workers who travel from site to site, or distributed remote teams are generally familiar with the T2200 process and issue these forms alongside T4s.
However, with so many employers responding to Covid-19 by moving their staff out of the office and into their homes, there are many people who now need to catch up quickly and create a T2200 process. Businesses with large teams should start planning for this addition to their year end process now. While the T2200 is short, if you wait until the last minute, you may find yourself manually issuing hundreds or thousands of forms.
To learn more about the T2200 and claiming work-from-home expenses, see this resource from the Government of Canada.
Need Help with T2200 for Foreign Remote Canadian Workers
As a company that employs foreign workers in Canada remotely, you may not have realized that T2200 forms are mandatory or how to comply with these requirements for your Canadian workers. The T2200 is just one of many forms that the CRA requires for remote worker tax compliance.
Whether you’ve been employing remote workers in Canada for years or have recently expanded to Canada, working with a PEO can help you maintain compliance and deal with forms like the T2200. Contact Canadian Payroll Services today to learn how we can help you maintain compliance for your remote Canadian workers as a foreign entity and how to simplify the payroll process.