Work from home expenses

As the pandemic drags on, most office workers are being asked to continue staying home. While more businesses are opening for in-person transactions, those who really can work remotely are generally being asked to do so.

Employers may be seeing a decrease in some expenses as a result of having empty, or nearly empty, offices. No more need to keep the snack kitchen stocked or buy yet another birthday cake. While employees may be saving money on commutes, coffee breaks and haircuts, they also may be seeing some of their own home expenses rise. For example, the cost of having high-speed internet or the additional heating and cooling costs associated with being at home all the time. Some employees considering long-term work from home may also be contemplating whether or not they need to move to a bigger place, or at least buy themselves a proper office chair to use at the kitchen table. Some employers may even be fielding questions about reimbursement for these additional expenses. Let’s consider what employers might want to do.

Do nothing

In most cases, employers will have already violated the terms of the employee’s contract by requiring them to work from home. In most cases, this has gone okay. Employees have accepted the change as necessary in the circumstances and have not asserted constructive dismissals. The result of such a constructive dismissal claim is difficult to predict as the employer, through no fault of their own, could no longer provide the employee with an office to work in. We will be looking out for some pretty interesting constructive dismissal claims in the coming months!

Assuming that employees have accepted working from home, in most cases, it is likely acceptable for employers to NOT provide employees with any sort of work-from-home allowance.

Employee tax deductions

Employees are allowed to deduct some home office employment expenses from their employment income, for example, a portion of their rent, utilities, and internet. This is provided that the employee is not reimbursed by the employer for these expenses, and provided that the employee is “required by the contract of employment” to incur these work from home expenses.

An employee would be “required by the contract of employment” to incur the expense of high-speed internet if this is something that the employer required for employees working from home. Where an employee does not have access to the employer’s office, they will likely be considered to have been “required by the contract of employment” to work from home – even where this is not explicitly written in the original contract.

Work from home allowances or reimbursements

Some employers are choosing to provide employees with work from home allowances or reimbursing them for certain work from home expenses. Where employers are considering this they should ensure that they create clear and fair policies. Employers may want to consider if the policy is for the Covid-19 pandemic situation only or whether it will continue indefinitely. They will also want to consider what tools employees may need to work more effectively from home. Where employers are buying equipment for employees to use at their homes, ownership of the equipment should be addressed, and inventories of what is being bought, and where it should be kept.

Employers will also want to consider whether reimbursements or allowances will be considered as income to the CRA. Please contact us if you have any questions.

Source: https://bit.ly/2Pyb1su

About the firm

Vlad Alyokhin, CPA, Professional Corporation
140 Yonge Street, Suite 320
Toronto, Ontario
M5C 1X6

T: 647-598-8777
E: vlad@alyokhincpa.com