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Board, lodging, and transportation at remote work locations

The CRA usually considers a work location to be remote when it is 80 kilometres or more from the nearest established community with a population of at least 1,000 people.

A location is considered an established community if it has essential services or those services are available within a reasonable commuting distance. Essential services may include access to:

• basic food store
• basic clothing store, with merchandise in stock (not a mail-order outlet)
• accommodation
• certain medical services
• certain educational facilities

Board and lodging at a remote work location

You can exclude from income the value of board and lodging, or an allowance (not in excess of a reasonable amount) for board and lodging that you provide to an employee who works at a remote work location , if all of the following conditions are met:

• The employee could not reasonably be expected to set up and maintain a self-contained domestic establishment because of the remoteness of the location and the distance from any established community
• You did not provide a self-contained domestic establishment for the employee
• The employee had to be away from their principal place of residence because of their duties
• The employee had to be at the remote work location

Transportation

You can exclude from income the value of free or subsidized transportation, or an allowance (not in excess of a reasonable amount) for transportation expenses, that you provide to an employee who works at a remote work location if all of the following conditions are met:

• The employee's duties required them to be away from their principal place of residence or to be at the remote work location for a period of at least 36 hours
• The free or subsidized transportation, or the allowance, was for transportation between the remote work location and any location in Canada. If the remote work location is outside Canada, you can exclude the allowance for transportation between that location and any location in Canada or outside Canada
• You (or a third party) provided board and lodging, or a reasonable allowance for board and lodging, to your employee for that period

If you need help determining whether a location qualifies as remote, see Archived Interpretation Bulletin IT-91R4, Employment at Special Work Sites or Remote Work Locations .

Form TD4, Declaration of Exemption – Employment at a Special Work Site

When there is an exemption for board, lodging, or transportation allowances you pay to employees who work at a remote work location, do not fill out   Form TD4.

Payroll deductions

If you exclude a benefit for board, lodging, and transportation at a special work site or remote work location, it is not a taxable benefit. Do not deduct CPP contributions, EI premiums, or income tax.

Forms and publications

• Form TD4, Declaration of Exemption – Employment at Special Work Site
• Archived Interpretation Bulletin IT-91R, Employment at Special Work sites or Remote Work Locations

Page details

Lenoury Law

Employment and labour law, cra clarification of work from home expenses and deductions.

While not specifically related to employment law, I thought that the information below might be of value to you and/or your employees. The CRA has clarified information on the topic of work from home expenses and also provided some additional relief with respect to the taxation of certain employee benefits during the COVID-19 pandemic in order to mitigate some of the extra costs associated with traveling to work safely. I have summarized some of the most important details below. For your reference, this page on the government of Canada website provides full details: Home office expenses for employees: What the changes are

CRA revisions to work from home expenses policies

For the 2020 tax year only, employees who have worked from home for at least one month due to COVID-19 can choose to deduct home office expenses through one of two methods:

• the new Temporary Flat Rate Method (new)
• the existing, but simplified, Detailed Method

Temporary Flat Rate Method

The new Temporary Flat Rate Method allows eligible employees to deduct C$2 per day for every day worked at home due to COVID-19, without regard to the expenses actually incurred, up to a maximum of C$400.

To be eligible for the temporary flat rate method, an employee must have worked from home due to COVID-19 more than 50 per cent of the time for a period of at least four consecutive weeks in 2020. 

NOTE:  Employees who chose to work from home when given the option are still eligible for the temporary flat rate method. 

• Employees may count the days in the four-week period and any other day the employee worked from home due to COVID-19. 
• Employees are not permitted to count days off, vacation days, sick leave days or other leaves of absence. 
• Eligible employees may still claim the deduction if their employer reimbursed some home office expenses.

Employees will not need to file supporting documents, but it is expected that employees will need to be able to demonstrate which days they worked from home in 2020 if the CRA were to conduct an audit.

New simplified Detailed Method:

Employees who meet the eligibility requirements for the temporary flat rate method are also eligible to use the simplified Detailed Method. Under the Detailed Method, employees may deduct the actual amount of supplies and home office expenses incurred while working from home, provided they have the necessary supporting documentation and a completed new Form T2200S. The new Form T2200S is a simplified version of the traditional Form T2200 specifically tailored for working at home during COVID-19.  It is a one-page document that requires the employer to complete the employee’s name, the employer’s address and answer three yes or no questions. The employer then completes the employer declaration. Link to Form T2200S 

The list of eligible expenses is the same as under the regular rules, i.e.: eligible expenses are limited to supplies consumed during employment and home office expenses used directly for work and not reimbursed by the employer. 

The one recent change (applicable to the regular process and the simplified process) is that the CRA announced that reasonable home internet access fees (but not connection fees) are eligible expenses.

The chart below sets out common eligible/non-eligible expenses. 

A more detailed list of eligible/non-eligible expenses can be  found on the CRA’s website.

Calculating Eligible Expenses

Employees can deduct home office expenses only for the part of the year the employee worked from home and the portion of the home office expenses related to working in their home office. 

Employees will need to determine the size of their workspace at home as a proportion of the overall size of home (e.g., the spare room is 10 per cent of the size of the apartment). 

The eligible portion of the expense will also depend on whether the space is used exclusively for work (e.g., a designated room) or a shared space (e.g., the dining room table). 

If an employee has a designated room, the deduction is not affected by the hours the space is used for work. 

However, if an employee is using a shared space (e.g., dining room), the deduction is based on the percentage of time that space is used for work (e.g., 40 hours out of 168 hours each week).

As an example:

• Eligible employee pays C$2,000 per month in rent
• Work space (eg dining room) is 10 per cent of total rented space

Employee can deduct:

• C$200 per month if the workspace is a designated room, or
• C$47.60 per month if the workspace is a shared space used 40/168 hours a week for work.

Required Documents

Employees will need supporting documents for the expenses that they deduct from employment income. 

Employees will also need an executed new  Form T2200S  signed by their employer.

Commuting Costs and Parking

Allowances, reimbursements, and payments for commuting costs and parking expenses generally constitute taxable benefits for an employee. 

However, in light of the COVID-19 pandemic, the CRA has adopted the following positions with respect to the taxation of employee commuting and parking benefits:

Working at the Office:   The CRA will consider an employee to  not  have received a taxable benefit if:

• the employee continues to work from their regular place of employment during the pandemic; 
• the employer pays for, reimburses, or provides a reasonable allowance for commuting costs incurred by the employee during the pandemic; and 
• the costs are over and above the employee’s normal commuting costs. This position applies to the use of employer-provided motor vehicles (assuming the employee did not normally commute to work using such a vehicle before the pandemic).

Working from Home:  The CRA will consider an employee to  not  have received a taxable benefit if:

• the employee works from home because the employee’s regular place of employment is closed; and 
• the employer pays for, reimburses, or provides a reasonable allowance for normal or additional commuting costs incurred by the employee to travel to the employee’s regular place of employment for any purpose that enables the employee to perform their employment duties from home. (e.g.  an employee travels to the office to pick up certain office equipment)

An employer must maintain appropriate records demonstrating the reasonableness of any allowances in relation to commuting costs. 

If an employee uses an employer-provided vehicle, the employee should maintain records indicating the number of kilometres travelled by the employee between his/her home and regular place of employment.

Employee home office expenses for 2021: Government extends temporary rules

Note: This blog is an updated version of our February 11, 2021 blog on the home office expense rules and focuses on the 2021 taxation year. For a summary of the rules that were applicable for the 2020 taxation year, see our February 11, 2021 blog .

In response to the millions of Canadians that continue to work from home due to the pandemic, the federal government announced as part of the government’s 2021 Fall Economic Statement  that the temporary home office expense rules introduced in 2020 will be extended to the 2021 and 2022 tax years and the maximum claim under the flat rate method will be increased to $500. As a result, forms T777S  “Statement of Employment Expenses for Working at Home Due to Covid-19” and T2200S  “Declaration of Conditions of Employment for Working at Home Due to COVID-19” will continue to be used.

As part of this blog, we will discuss the following topics:

• overview of the tax rules for home office expenses
• updated temporary home office expense claims process
• T2200 considerations for employers

Overview of tax rules for home office expenses

Under normal circumstances, employees who want to deduct their home office expenses must meet two main conditions.

First, an employee must be required by their contract of employment to maintain a workspace in their home and pay for the related expenses. Employers attest to this requirement on T2200 forms issued to their employees, and employees are only eligible to claim a deduction if they have this form in hand.

Second, the use of the workspace must meet one of two conditions:

• the workspace is where the employee “principally” (more than 50 per cent of the time) performs the duties of their office or employment
• the employee uses the workspace exclusively for earning employment income and for regularly and continuously meeting customers or clients while doing their work

These rules have not changed. The changes introduced by the Canada Revenue Agency (CRA) for the 2020 tax year and the extension of these changes to 2021 are administrative concessions to these rules. Employees who worked at home before the pandemic should follow the detailed method  for claiming a deduction for 2021.

Updated temporary home office expense claim process

For employees who worked from home during 2021 due to the pandemic, the CRA has simplified the process by:

• relaxing the employment contract requirement and providing a simplified definition of what working principally from home means in a pandemic
• allowing employees to claim a temporary flat rate deduction for 2021 if conditions are met, instead of using the detailed calculation
• providing extensive online tools, forms and guidance to help employees claim the deduction

The eligibility criteria and calculations for the detailed and flat rate methods are slightly different, as we discuss in the next two sections.

Temporary flat rate method: Eligibility criteria and calculations

Under the temporary flat rate method, employees qualify for a 2021 deduction if they meet all of the following conditions:

• worked from home in 2021 due to the pandemic
• worked from home more than 50 per cent of the time for at least four consecutive weeks in that year
• claim home office expenses only and no other employment expenses
• were not fully reimbursed by their employer for all of their home office expenses

The temporary flat rate method allows eligible employees to claim a deduction of $2 for each day they worked at home in 2021 due to COVID-19, up to $500. The amount is a substitute for actual home office expenses paid by the employee, such as rent, electricity, home internet access fees, office supplies (e.g., pens, paper) and unreimbursed cell phone costs.

Other points to keep in mind:

• if an employee was not required to work from home, but their employer provided them with the choice to work at home because of the COVID-19 pandemic, then the CRA will consider the employee to have worked from home due to COVID-19
• employees who want to claim other employment expenses, such as employment-related auto expenses, must use the detailed method
• an employee who was reimbursed for some but not all of their expenses can use the flat rate method as long as they meet the other conditions
• the number of days worked at home due to the pandemic includes both full-time and part-time days but not days off (whether for vacation, illness or another reason)

Although the deduction is limited, the temporary flat rate method has some advantages:

• employees choosing the temporary method do not need to have their employers complete and sign a Form T2200 or T2200S, although they should do their best to document how many days they worked at home
• they do not need to determine and summarize eligible costs, or keep receipts
• if they worked at home occasionally during parts of the year but not primarily at home, those days will count if the individual otherwise qualifies

Employees must use the Form T777S, “Statement of Employment Expenses for Working at Home Due to COVID-19”  to report that they are using the flat rate method and calculate their deduction.

Detailed method: Eligibility criteria and calculations

Under the detailed method, employees can claim the employment portion of actual home office expenses paid. Although these temporary rules are simplified, the calculations are essentially the same as for employees who are required to work at home more generally.

Under the detailed method, employees qualify for the deduction if they meet all of the following conditions:

• worked from home in 2021 due to the pandemic or were required to work at home by their employer
• were required to pay for expenses related to their home workspace and used the expenses directly in their work
• worked in their home workspace “mainly” (more than 50 per cent of the time) for at least four consecutive weeks, or
• only used their workspace to earn employment income, in particular, for regularly and continually meeting clients, customers or other people while doing their work
• have received a signed T2200 or T2200S form from their employer

The CRA has confirmed the employer’s requirement for an employee to work from home may be a written or verbal agreement. It does not have to be part of the employment contract. As was the case for the flat rate method, employees who chose to work at home due to the pandemic will be eligible.

Qualifying employees using the detailed method must first determine the total of their eligible expenses overall. They must then prorate these expenses (excluding office supplies) based on the portion of their home used for employment, as we discuss in the next section.

Determining the percentage of workspace at home

To claim the employment portion of actual amounts paid, employees need to determine the portion of their home used for work based on both size and use (employment versus personal). For common areas, such as a kitchen table, the proration needs to account for both the floor space used for employment and the time spent.

If a specific space is used only for employment, employees will only need to prorate based on the amount of that space. The CRA provides plenty of examples and guidance  for determining the percentage of the employee’s home used as a workspace, including situations such as common versus designated workspaces, more than one employee working in the same home, and changes of workspace during the year.

Eligible expenses

Eligible expenses  include home office expenses as well as office supplies. Employees must separate the expenses between their employment use and non-employment (personal) use.

Eligible home office expenses include electricity, heat, water, utilities, home internet access fees, maintenance and minor repairs, and rent. (Commissioned employees can also claim some other expenses).

Non-eligible home office expenses include mortgage interest, principal mortgage payments, home internet connection fees, furniture (e.g., office chairs and desks) and capital expenses (e.g., replacing windows, flooring and furnace). To determine the amount that is deductible, eligible home office expenses are prorated by percentage of the home used as a workspace (discussed above).

Where an employer requires the employee to pay for office supplies or certain phone expenses, the employee may be able to claim those expenses. The CRA’s website includes a comprehensive list of eligible and ineligible supplies. Eligible supplies do not need to be prorated like other home office expenses.

In general, to be eligible, the cost of supplies must relate to things that are consumed when doing work, such as paper or ink. The costs of more permanent items like calculators and computer cables are not deductible as office supplies, even though they are relatively inexpensive. The CRA is quite strict in applying these rules.

Calculating eligible home office expenses

Once the proration factor for costs (other than supplies) and total costs has been determined, the employee can then determine the portion of each type of cost that is eligible for deduction. When doing the calculation, only expenses incurred during the work-from-home period(s) qualify.

For employees using the detailed method, the CRA provides guidance to help determine eligibility , employment use of workspace  and eligible expenses . The CRA also offers an online calculator  that guides users through the process of computing the home office expense deduction under the detailed method, including prorated amounts.

One common question is how to calculate the amount of internet access fees that relate to employment. The CRA’s calculator prorates these costs like other costs such as electricity or heat (i.e. based on the home work space percentage). The CRA has confirmed with us that they would allow employees to use another reasonable method for this calculation, but they must ensure they meet all the following conditions:

• the cost of the internet plan is reasonable
• the cost of the internet plan has been divided between employment and personal use on a reasonable basis
• the employee is able to substantiate the amount of data used directly in the performance of their employment duties

The employee should include the employment-use portion of the fees calculated under “other expenses” on line 9270 of the T777 or T777S forms. In addition, if using the online calculator, the home internet fees should not be included in the box “Total electricity, heat, water and home internet access fees you paid from” as this total number will be prorated by the workspace at home allocation.

Another thorny issue relates to condominium fees. The CRA has stated that employees can claim the portion of these fees that relate to electricity, heat and water consumed in a condo unit owned by the employee using a reasonable basis. Calculating the utility portion of maintenance fees will be difficult for most taxpayers as they will need to obtain and extract information from the condo corporation’s financial statements. To assist with this, the CRA has indicated to us that they will accept that the administrator of the condominium building provides the information from either the current or previous fiscal year, whichever is available at the time of the request.

Employees who use the detailed method must maintain documentation to support their home office expense claim and have a signed copy of either Form T2200S or T2200 at the time they make their claim.

Employees claiming both home office and other employment expenses (such as automobile deductions) should use Form T777 Statement of Employment Expenses . Employees claiming home office expenses only should use the simplified Form T777S .

Which method produces the best result?

Like many things in tax, the best approach should be determined case by case, based in part on the answers to these questions.

• Do you rent your home? Under the detailed method, renters generally have higher eligible expenses than homeowners. Mortgage interest is generally not deductible, and costs such as insurance and property taxes are only eligible for commissioned employees. However, such expenses are indirectly reflected in rental payments, so the total expense that renters use as a starting point is usually much higher.
• Do you own your home? Although $2 per day doesn’t sound like much, if your actual eligible costs are mainly limited to utilities and internet, then your actual prorated cost may be in this ballpark.
• What is a reasonable internet amount? As discussed, the CRA’s calculator prorates internet costs based on floor space usage in the same way as other costs. If an alternative but reasonable approach is used, this could result in a somewhat higher deductible amount than the fixed rate approach.
• Do you qualify under one method but not the other? Some employees may be eligible for one method but not the other. For example, an employee who also wants to claim automobile expenses must use the detailed method.
• Did you return to the office during 2021?   In one example , the CRA addresses a situation where an individual (“Kumi") worked at home full-time for two consecutive months (April and May) and then worked part-time for the balance of the year. During the part-time period, the individual was working primarily in the office. Under the detailed method, only expenses for April and May will be allowed while the workdays at home after May will count under the flat rate method.
• Which method is simpler and costs less? If you qualify, the fixed rate method is simpler to use and no T2200 is needed. If you use a practitioner to prepare your tax return, the fees may be lower depending on how you are charged and the work involved to make a detailed claim.

The CRA has provided extensive guidance , including a FAQ page , and online tools to help employees navigate these rules and determine which method to use. In addition, CRA’s T4044 Employment Expenses guide  has been updated to reflect the 2021 home office expense rules and is a helpful resource.

T2200 CONSIDERATIONS FOR EMPLOYERS

The CRA will continue to require employees who want to claim home office expense using the detailed method to obtain either the T2200 or T2200S.  We thought it would be helpful to recap some of the most common concerns we heard last year from employers as they are still applicable in 2021:

Which form?

As discussed, a T2200 or T2200S is only needed for employees who want to use the detailed method. If the employee worked from home only because of the pandemic, the T2200S can be provided to them. For employees who have additional expenses, such as working from home generally (i.e. before the pandemic hit), travel expenses or other costs, then the regular T2200 is required. The CRA updated the T2200 on January 18, 2022 , but unfortunately, it did not include the new home office wording from the T2200S on the T2200. On the revised T2200, the home office question is “Did this employee's contract of employment [under the contract itself or in a separate written or verbal agreement] require them to use a portion of their home for work?” We asked the CRA for guidance where an employee worked at home due to the pandemic only but also had other deductible employment expenses. In such a situation, we believe the best approach is to complete the T2200 for non-home office expenses only (i.e. don’t answer question 10 and the related information) and provide the employee with a T2200S in the same manner as other employees to cover off home office expenses. We are awaiting comments from the CRA on this issue, but we believe our suggested approach is reasonable.

Employers’ responsibilities

As discussed, employees who want to use the detailed method must have a T2200 or a T2200S. Employers will need to decide whether to go ahead and provide the form (generally, T2200S) to any employee who could be eligible to use the detailed approach, or whether they will only provide the form to employees who ask for it.

The CRA indicates  that employers may generate Form T2200S electronically as long as the certain conditions are met. The CRA has created a fillable PDF form as well as a corresponding xml file to assist employers. In addition, the CRA confirms that an electronic signature can be used.

Authorized person

According to the CRA , determining who is an authorized person for purposes of certifying the T2200 and T2200S forms is up to the employer’s discretion. The CRA does not require the form to be signed by an authorized “officer”. The authorized person’s contact information is required to be included in case the CRA would like to follow up, and employers should consider this when determining who should certify the form.

Interaction with CRA’s $500 reimbursement policy for home office equipment

Many employers are paying reimbursements and have taken advantage of the CRA’s temporary reimbursement policy on home office equipment in 2020 and 2021. For many employers, some of the costs will be for supplies (which would not create a benefit if consumed for work) and others will be for equipment such as desks, monitors, chairs, etc., which are not deductible as employment expenses.

The CRA has confirmed that if the employee is reimbursed for the purchase of office or computer equipment, all of which are expenses that are NOT eligible to be claimed by the employee as employment expenses, the employer should indicate “No” for question 2 “Did you or will you reimburse this employee for any of their home office expenses?” on the Declaration of Conditions of Employment for Working at Home Due to COVID-19 (Form T2200S).

Employees who were already required to work from home

The new measures do not affect employees who worked from home before the pandemic and claimed the related expenses. Employers should follow their existing T2200 process for these employees.

The views and opinions expressed in this article are those of the author and do not necessarily reflect that of CPA Canada.

Employee home office expenses: Special rules for 2020 claims

If you work primarily from home, your trips to the office could be tax deductible

Court sides with beauty company employee who had to drive from her home office in Pickering to head office in Oakville

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Article content

While some of us continue to work from home during COVID-19, others don’t have that flexibility and commute daily to and from the office. While in the past, many may have taken public transit to get to work, since the pandemic hit, the fear of taking mass transit has caused some daily commuters to begin driving to work, raising the question as to whether any of these commuting expenses may be tax deductible.

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Generally speaking, the Canada Revenue Agency considers the cost of driving back and forth between home and work as a personal expense. But, what if your main place of employment is actually your home office and you only occasionally visit your employer’s place of business, but don’t have a regular work spot there? That was the issue in a tax case decided last month.  

If you work primarily from home, your trips to the office could be tax deductible Back to video

The general rule.

Before getting into the details of the case, let’s review the general rule surrounding the deductibility of automobile expenses by employees. If you’re an employee who uses your car for work, you may be able to deduct some of your automobile expenses on your tax return, assuming you meet certain conditions. First, you must normally be required to work away from your employer’s place of business or in different places. Second, under your contract of employment, you must be required to pay your own automobile expenses and this must be certified by your employer on a signed copy of the Canada Revenue Agency’s Form T2200, Declaration of Conditions of Employment. Finally, to claim vehicle expenses, you must not be the recipient of a “non-taxable” allowance for motor vehicle expenses.

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If your employer does provide you with an allowance but you feel that the amount you received was not reasonable to cover the actual operating costs of your vehicle, you can deduct the “work” portion of your actual vehicle operating expenses, provided any employer vehicle allowance paid to you is included in your income. To justify your motor vehicle expense claim, it’s important to keep proper records of the kilometres driven for work versus those driven for personal use.

The issue in the recent case was not the quantum of automobile expenses claimed — some $12,868 in 2015 — but rather whether the expenses were deductible at all. The taxpayer, an employee of a global beauty company that manufactures and sells cosmetics, was reassessed by the CRA for attempting to deduct vehicle travel expenses she had claimed for driving between the location of her home office, located in Pickering, Ont., and her employer’s principal place of business, located in Oakville, a one-way distance of 72 kilometres.

The sole question before the Tax Court was whether her expenses “were incurred for travelling in the course of … employment.” The taxpayer maintained that the travel at issue was, indeed, employment travel, as it was between two places of her employment (one being her home office.) The CRA, following its longstanding administrative position, felt that the taxpayer’s driving between her employer’s place of business in Oakville and her home should be considered personal travel and not employment travel.

The taxpayer’s employer provided her with a duly-completed Form T2200 for the 2015 taxation year, signed by her employer’s chief financial officer. The form attested to the fact that her employment contract required her to use a portion of her home for work, and that the percentage of her employment duties performed from home was 90 per cent.

The taxpayer testified that she worked daily from her home office, speaking with customers and potential customers, as well as with members of her sales team. This would account for the 90 per cent of her employment work referred to on the T2200. She would also meet with customers time to time by driving to their locations from her Pickering home office.

Occasionally, the taxpayer was required to travel to her employer’s Oakville office for “one-on-one” meetings with her boss, meetings with the entire marketing team and “town hall” meetings organized by the company for all its employees across the country and beyond. The taxpayer did not have her own office or workstation at the Oakville office and when she did need a place to work when she was there (typically before or after the particular function that required her to be there), she would either use the boardroom, if it was empty, or her boss’s office, if available.

Her required trips to the Oakville office were more frequent during times of spring and fall planning when new beauty products would be introduced to the Ontario market. The taxpayer also testified that she never worked from the Oakville office on a “9-to-5 basis,” rather attended there “irregularly and for one- or two-hour visits.”

In his analysis, the judge referred to a 2003 case involving employment travel, which concluded that the cost of travel by employees between two employment-related locations was not personal travel but rather was considered properly tax deductible as employment-related automobile travel. As the judge in that case wrote, “The evidence established beyond any doubt that when they left their offices in their homes and went to some other place to conduct business they were going from one place of business to another place of business and they did so when they were returning to their home offices. The Court does not consider it significant that after they came home they might have gone to bed or turned on the TV or had a sandwich or raided the refrigerator, whatever the case may be. That does not militate against a finding that they were involved in business related activities on the way home.”

The judge in the current case therefore concluded that the employee’s automobile expenses should be fully deductible since the taxpayer’s T2200 clearly indicated that she was required to work from a home office and specified that 90 per cent of her work was to be performed from there. In addition, it was clear that the taxpayer did not have appropriate office facilities available for her at her employer’s Oakville location.

[email protected]

Jamie Golombek, CPA, CA, CFP, CLU, TEP is the Managing Director, Tax & Estate Planning with CIBC Private Wealth Management in Toronto.

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Reimbursements and allowances for remote workers’ travel expenses

This content was originally published in the Canadian Tax Foundations newsletter: Canadian Tax Focus. Republished with permission.

Travel between an employee’s residence and a regular place of employment (RPE) has long been considered by the Canada Revenue Agency (CRA) to be personal travel and not part of the employee’s office or employment duties; therefore, any reimbursement or allowance relating to this travel is a taxable benefit. Conversely, where travel relating to a location other than an RPE is involved, such payments are non-taxable.

But what is an RPE in this era of remote work? A recent technical interpretation provides that a location used for a one-time, multi-day training session for remote workers is not an RPE for those workers (CRA document no. 2022-0936671I7, June 30, 2022); the CRA therefore concludes that the reimbursements and allowances for travelling there are generally non-taxable. However, the CRA notes one exception: allowances for meals (and presumably lodging) are non-taxable only if the rules for a special work site apply.

The CRA generally comments that whether a location is an RPE is a question of fact. CRA document no. 2012-0432671E5 (August 13, 2012) observes that a location could be an RPE even if the employee works there only once or twice a month, but the location might not be an RPE if the employee works there only once or for a few days during the year. In contrast, CRA document no. 2016-0643631E5 (August 17, 2020) declines to offer an opinion on a situation where an employee works at two different locations on alternating weeks. The 2022 technical interpretation takes more definitive positions, which are favourable to the employee.

The 2022 technical interpretation concerns an employer’s plans to hire new employees who reside far from the employer’s offices. The employees may work from home or designate one of the employer’s offices as their place of work, without requiring regular attendance or reserving an onsite workspace. The employer will also provide the necessary equipment for remote work. In addition, the employees will be required to attend a single three-day event during their employment contract for training and team-building activities. For employees who are required to attend, the employer will reimburse reasonable accommodation and transportation costs (bus, train) or provide a per-kilometre motor vehicle allowance. A meal allowance will also be provided.

The CRA concludes that the work location designated in the employment contract is not considered to be an RPE for the new employees. Therefore, reimbursements of travel expenses do not need to be included in their income under paragraph 6(1)(a). Also, reasonable per-kilometre allowances received by employees for the use of their motor vehicle for travel in the course of performing their duties will not be included in their income by virtue of subparagraph 6(1)(b)(vii.1).

The CRA notes that the situation for meal allowances is different. The exemption in subparagraph 6(1)(b)(vii) for reasonable allowances for travel expenses that are not for the use of a motor vehicle requires that the employee be travelling away from the municipality where the employer’s establishment is located. Since the employee’s home is not such an establishment, this condition is not satisfied. However, the CRA notes that the meal allowance could be non-taxable by virtue of subsection 6(6)—special work site. The CRA agrees that the work to be performed (that is, training and team-building activities) is considered temporary in nature and required as part of the employee’s duties. As such, the amounts paid for travel will not be required to be included in their income if all other conditions of the subsection are met. In particular, the employee must be away from home or at the special work site for at least 36 hours and cannot be expected to return home daily from the special work site because of the distance involved.

Similar reasoning would presumably apply to allowances for lodging expenses, although this issue was not discussed.

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The Income Tax Act provides that employees are not able to claim certain deductions against employment income unless they have a form signed by their employer certifying that the conditions for the deduction have been satisfied. Form T2200, Declaration of Conditions of Employment has traditionally served this purpose. Due to the number of employees working from home in 2020, concern was expressed by employers that this requirement would impose a significant burden on employers at a very inopportune time. For 2020, the CRA has announced measures designed to alleviate the burden on employers.

As noted above, Form T2200 (or simplified Form T2200S, Declaration of Conditions of Employment for Working at Home Due to COVID-19 ) will not be required by employees seeking to deduct work from home expenses under the temporary flat rate method.

For employees seeking to deduct expenses using the detailed method, Form T2200 or Form T2200S will be required. Form T2200S is an abbreviated version of Form T2200 and will apply in situations where employees are working from home due to the COVID-19 pandemic and are only seeking to deduct office supplies and home office expenses (Form T2200S cannot be used by employees wishing to claim other employment deductions, such as motor vehicle expenses).

The circumstances in which Form T2200 or Form T2200S should be issued can be summarized as follows:

Form T2200S – observations

• Notwithstanding the flat rate method, it is anticipated that many employees will likely request a Form T2200S, as they will either expect to claim more using the detailed method or wish to keep their options open. While the good news is that Form T2200S is significantly less onerous than the CRA’s previous draft, employers should be prepared to potentially have to issue a relatively large number of the Form T2200S. We understand that it is the CRA’s expectation that employers will issue the T2200S to eligible employees who request the form.
• Form T2200S asks the employer to certify that the employee worked from home in 2020 due to COVID-19 and was required to pay some or all of their own home office expenses used directly in their work while carrying out their duties of employment during that period. To that end, employers are asked to answer three questions on the form: (i) whether the employee worked from home due to COVID-19; (ii) whether the employee received reimbursement or is eligible for reimbursement of home office expenses; and (iii) whether amounts reimbursed were included on the employee’s T4.
• In order for the employer to indicate that the employee worked from home due to COVID-19, the employer is only required to be satisfied that the employee worked more than 50% of the time from home for a period of at least four consecutive weeks in 2020. This relieves the need for employers to closely monitor where the employee worked over an extended period of time.
• It is noteworthy that Form T2200S only asks the employer to certify whether the employee worked from home due to COVID-19 and not whether the employee’s contract of employment required the employee to maintain a work space in his or her home. The CRA’s historical position was that where an employee had a work space on the employer’s premise available to him or her but chose to work from home, such an employee would not be considered to be “required” to maintain a work space at home. In the context of COVID-19, whether the employee was “required” to maintain a work space at home has been a difficult question, especially where employer premises have remained open but the employee has, for one reason or another, not felt comfortable to physically return to the office. The CRA’s guidance suggests that, for 2020, the CRA will infer that employees who worked from home were required to work from home.
• The regular Form T2200 requires the employer to identify expenses reimbursed, the amount of the reimbursement, and whether the reimbursement was included on the employee’s Form T4, Statement of Remuneration Paid. Form T2200S only asks the employer whether the employee has received or will receive reimbursement for any of their home office expenses, but the employer is not required to specify the amounts reimbursed or indicate what amounts were included on the employee’s T4. This will come as a relief to employers who reimbursed employees for expenses but did not track whether the reimbursement related to home office expenses or other employment-related expenses. It is expected that common expenses that may be reimbursed include items such as printer paper, toner, etc.
• In order to enable employees to effectively work from home, many employers have reimbursed employees for the cost of equipment needed to work from home, such as computer monitors, office chairs, etc. Provided that the reimbursement is less than $500, in aggregate, the CRA has indicated that such reimbursements will not be a taxable benefit. While the CRA was not explicit in this regard, the reimbursement for equipment only would not be considered to be a reimbursement of home office expenses for purposes of Form T2200S, because the cost of such items would not be deductible to employees in any event.
• Certain employee-specific information that exists on the regular T2200 is not found on the Form T2200S. Much of this information is now found on the Form T777S, which is a form that the employee completes and files with his or her personal tax return. This shifts some of the burden away from the employer to the employee, who is ultimately responsible for satisfying the conditions necessary for the deduction.
• Where more than one person in the same household is working from home (such as two spouses), they may each be able to claim the home office expense deduction (under either method) as long as they each satisfy the eligibility criteria.
• A number of these changes will likely only apply to 2020, but it remains to be seen whether other changes represent a permanent change in position. For example, will the expansion of home office expenses to include internet charges apply in subsequent years?

Calculating the deduction

The CRA has updated its website to provide detailed guidance on how to calculate the amount of home office expenses that reasonably relate to an employee’s work space at home and on how to claim the deduction on their 2020 personal tax return. For more information, see Home office expenses for employees - Canada.ca .

Quebec harmonization

On 16 December 2020, Quebec’s Department of Finance announced that it will harmonize its rules with the CRA to offer a flat rate $2/workday at home as well. Where the flat rate method is chosen, the employee will not have to obtain a Form TP-64.3, General Employment Conditions (the Quebec equivalent of Form T2200), from their employer nor keep supporting documentation to substantiate their claim.

Revenu Québec also recently released an updated Form TP-64.3 to take into account circumstances where employees are required to incur expenses related to working remotely during the COVID-19 crisis. Where the employee only incurred such home office expenses, the employer can skip most of the Form TP-64.3 questions and go directly to new section 3.6, Expenses related to working remotely , where they are asked to answer questions that are very similar to ones on Form T2200S.

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Ernst & Young LLP (Canada), Toronto

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Ernst & Young LLP (Canada), Kitchener/Waterloo

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CRA Mileage Rate 2024: Guide to Tax-Free Vehicle Allowances For Business Travel

Cra mileage rate 2024.

Are you an employee, small business owner, or self-employed individual looking to understand the rules and regulations of CRA mileage rate this 2024 ? Canadian taxpayers need to be aware of what they can expense on their taxes as entertainment, such as meals or kilometres travelled in a car.

We will discuss all relevant to ensure you maximize your deductions for businesses travelling while remaining compliant.

Key Takeaways

• 70¢ per kilometre for the first 5,000km driven
• 64¢ per kilometre after that
• 74¢ per kilometre for the first 5,000km driven
• 68¢ per kilometre after that

Changes to the CRA mileage rate for 2024

When reimbursing employees for business travel, the Canada Revenue Agency (CRA) has set out a specific set of rules that employers must adhere to. Canadian taxpayers should be aware of these rules when managing their business expenses to avoid any penalties from the CRA.

The 2024 standard CRA mileage rate per kilometre is currently 70 cents with a 4-cent per kilometre reduction after the first 5,000 kilometres driven yearly.

Here’s the CRA’s Automobile Allowance Rates for the past five years:

You can report any tax-subjected automobile allowances paid to employees or officers on Form T2200 Declaration of Conditions of Employment .

Employers can claim input tax credits based on reimbursements made for these expense claims but must ensure they keep detailed records alongside invoices related to any incurred costs.

Businesses must recognize reimbursement requirements, as failure to comply could result in CRA-implemented fines and other financial penalties, which will financially affect both employers and their staff.

What is CRA mileage allowance and tax-free vehicle allowance in Canada?

The CRA mileage rates are a guide set by the Canada Revenue Agency to reimburse taxpayers for vehicle expenses incurred for business use. They calculate the deductible expenses related to operating a vehicle for business, medical, moving, or charitable purposes. Taxpayers can use these rates to calculate their deductible vehicle expenses when filing their income tax returns.

How to use the 2024 CRA mileage rate and automobile allowance: Salaried workers, Self-employed, and Employers

Mileage reimbursement rules for salaried workers.

Employees may be eligible to claim allowable motor vehicle expenses on their income tax return if they incurred these expenses under the terms of their employment contract. For instance, if an employer agrees to reimburse travel expenses for using one’s personal vehicle for work-related tasks.

However, it’s essential for employees to maintain accurate records and evidence to substantiate that the kilometers claimed were indeed for business purposes.

Mileage Reimbursement Rules for Self-employed

Self-employees can also deduct business-related vehicle expenses. This also applies to personal cars used for business purposes such as purchasing supplies for your businesses, meeting with clients, attending conferences, or visiting customers. Other expenses may also include:

• License and registration fees
• Fuel and oil expenses
• Insurance fees
• Maintenance and repairs expenses
• Leasing costs
• Capital cost allowance

The allowance will be deducted in the annual tax returns. But remember, self-employees must keep receipts and invoices in order to get deductions. Expenses incurred for personal use of their personal vehicle will not be eligible for coverage under the allowance.

Mileage Reimbursement Rules for Employers

There is no law mandating that employers must compensate employees for using their personal vehicles for business purposes – this depends on individual company policies or contracts.

Nevertheless, implementing a mileage allowance using Canada Revenue Agency (CRA) standards can make a job offer more attractive to potential employees, as it compensates for their personal vehicle usage.

With a CRA mileage allowance, employers are obliged to cover employees’ work-related vehicle expenses. This reimbursement also provides a tax benefit for the company. To qualify as legitimate and tax-deductible, the reimbursement should:

• Cover the yearly amount of kilometres driven solely for business purposes
• Be based on a reasonable per-kilometre rate or slightly lower than the official CRA vehicle allowance rates
• Be for the employee who hasn’t already been reimbursed for the same use of their vehicle.

If these conditions are met, the mileage reimbursement is considered a non-taxable benefit for employees.

Eligibility For CRA Mileage Rate 2024 And Tax-Free Vehicle Allowances

The CRA provides rules and regulations for claiming tax-free vehicle allowances and mileage rates when travelling for business purposes.

You are also eligible if you use your car to attend conventions, seminars or meetings, and other activities with work-related purposes away from home. But travelling from your home to your normal place of work is not considered business-related driving.

The type of transportation used is essential—employees using public transport, such as buses and subways, do not qualify for any reimbursements. At the same time, those who choose personal cars will receive a predetermined per-kilometre rate (according to the CRA standard mileage rate as shown above).

4 Types Of Business Travel Eligible For CRA Mileage Rates And Tax-Free Vehicle Allowances

• Regular Work Locations
• Temporary Work Locations
• Home Office as a Regular Work Location
• Commuting to Work

Whether travelling for regular work locations, temporary work locations, home office or commuting to work, you’ll find everything you need to know about the CRA mileage rates and tax-free vehicle allowances here.

Canada Revenue Agency (CRA) defines regular work location as any workplace that the employee visits at least once a week on a sustained basis for a purpose related to their employment.

It includes both long-term and short-term job positions or assignments. The employer must be able to provide sufficient proof of attendance; records such as timesheets should help demonstrate this.

In addition, travel expenses associated with these locations are only eligible for reimbursement if they are located more than 80 km (one way) from the primary place of business or residence of the employee.

For example, an accountant who works in Toronto but travels to Ottawa each weekend would likely qualify for CRA mileage rate reimbursements since it’s more than 160 km one way between cities—even if he has not been assigned there permanently yet.

Any work location other than an employee’s regular place of employment is considered a “temporary” work location and would be eligible for mileage rate and tax-free vehicle allowances.

According to CRA guidelines, temporary locations last up to four weeks or have been pre-approved by the employer in writing. Considering all surrounding circumstances, the employer must demonstrate why the travel was reasonable.

Any expenses related to this travel, such as lodging, meals, allowance and specific motor vehicle rates, can be deducted from income if proven to be necessary business or relocation expenses incurred during that journey.

• Home Office As A Regular Work Location

Home offices may qualify for either CRA mileage reimbursement or tax-free vehicle allowance when it is determined to be a regular work location.

To qualify as a regular work location, the home office must be used for working with clients or customers more than 50% of the time each month and must meet specific criteria, such as having private entrances, separate telephone lines and an exclusive portion of the residence dedicated solely for business activities.

• Commuting To Work

Commuting expenses incurred while travelling to and from work regularly are usually not eligible for mileage rate or tax-free vehicle allowance benefits under the CRA.

However, Canadian taxpayers can claim certain commuting expenses for business activities associated with their job or profession that require them to travel and attend industry events or other such engagements away from their workplace.

To be eligible, the primary purpose of this travel must be generating income by performing duties related to your job/profession rather than commuting between home and work.

LEARN MORE: How to Find the Best Tax Accountant Near Me

Mileage Reimbursement Implications

Tax implications.

In Canada, tax deductions are available to businesses for business travel expenses, including mileage and car allowances. Mileage allowance paid to employees or officers is treated as a taxable benefit subject to the employer’s income tax withholding at source.

If an employee is provided with the use of a company car, this will be presented as part of their salary, and taxes will be deducted accordingly. For employers, eligible expenditure on providing car allowances to employees may also qualify for input tax credits if applicable according to prevailing rules in each province or territory.

Accurate tracking and record-keeping are essential when claiming CRA mileage rates and tax-free vehicle allowances for business travel. Recent changes have been implemented regarding the supporting documentation that employers must keep to claim certain deductions from their business’s income taxes relating to these types of expenses (e.g., a detailed log that includes the date of travel, route taken, and distance travelled).

If you need clarification about the tax implications, you can always consult a tax accountant who can help you with personal and corporate tax matters.

External Influences

• Economic Conditions : Rates might be adjusted to align with prevailing economic conditions.
• Cost of Fuel: Fluctuations in fuel prices may cause the allowance rate to increase or decrease.
• Inflation Rates: General inflation can affect the cost of vehicle maintenance, repairs, insurance, and other related expenses. CRA might adjust the mileage allowance accordingly.
• Policy Changes: Any new regulations regarding business expenses and reimbursements might necessitate changes to the allowance.
• Technological Advancements: The increase in electric and hybrid vehicles can affect the per-kilometre cost calculation regarding vehicle expenses, which could potentially impact the CRA mileage allowance.

3 Tips For Managing Business Travel Expenses and Mileage Tracking

– Provide clear guidelines for employees to follow when tracking and recording business travel expenses, such as keeping detailed records and utilizing technology.

1. Keep Detailed Records

Keeping detailed records of business travel expenses is essential for Canadian taxpayers. It helps to accurately calculate CRA mileage rates and tax-free vehicle allowances and avoid potential issues during an audit from the Canada Revenue Agency (CRA). Taxpayers need to keep records such as:

• Gas receipts

• Oil changes

• Car maintenance & repair costs

• Insurance payments

• Any other related out-of-pocket expenses

By keeping these mileage records, Canadian taxpayers can easily track their business travel expenses and ensure everything is accounted for correctly. Further, it provides evidence that any vehicle deductions are legitimate, so there are no problems or additional costs associated with CRA audits. Technology can also help Canadians monitor their spending by using various automatic mileage tracking tools, such as Driversnote’s expense reimbursement system and tracking tool – perfect for managing business trips abroad or just around town!

2. Use Technology To Track Vehicle Expenses

Technology can be a valuable tool for managing business travel expenses associated with CRA mileage rates and tax-free vehicle allowances. Mileage tracking apps and other tools can enable accurate record-keeping and precise calculations, which can help taxpayers claim total tax deductions. Keeping a detailed log of trips is still necessary, but using technology reduces the need for manual tracking of odometer readings while adding convenience.

Examples of mileage tracking apps include TripLog , MileIQ , QuickBooks Self Employed , etc. Additionally, businesses may install GPS units on employee vehicles to keep track of automobile-related expenses for various purposes, including deduction claims at year-end taxes or providing client billing information when required.

Using these apps or tools can make managing business travel expenses in different locations within Canada easier by automatically tracking all drives based on time spent driving as per kilometre rate set by the CRA standard mileage allowance (SMA). It saves time to manually enter odometer readings every time an individual travels between two points, ensuring that no detail remains unaccounted during tax filing or claiming expenditures from bosses/employers, respectively.

DISCOVER: Free Resources

3. Reimburse Employees Promptly

Employers must ensure that employees are reimbursed promptly and accurately for travel expenses on business trips to avoid any potential complications or legal ramifications.

Promptly reimbursing employees helps maintain employee morale and makes them feel empowered and valued, primarily if the employer guides them in navigating the expense system. Hence, they know exactly what to do when their reimbursements will be delivered and why it’s crucial.

According to Canadian tax laws, employers who provide an automobile allowance must maintain documents clearly outlining this arrangement and documenting all claims made by employees against it via an expense reimbursement form.

Furthermore, failure to automate the process in some way may lead to delays with repayment — another aspect that should be addressed in such arrangements.

• Understanding Provincial/Territorial Allowances and Mileage Rates in Canada

Canadian taxpayers are responsible for understanding the differences between federal and provincial/territorial allowances when claiming expenses related to business travel.

The CRA has a standard mileage rate of $0.70 per kilometre for the first 5,000 kilometres driven each year; however, some provinces or territories might have additional tax-free vehicle allowance amounts based on their accommodations, cost of living or other particular circumstances that could increase the amount an individual can claim up from CRA’s base rate.

CRA Mileage Rate 2024 Conclusion

As business travel can be complicated and expensive, understanding the CRA mileage rates and tax-free vehicle allowances is essential. Following the rules prescribed by the Canada Revenue Agency (CRA) can save time, money, and energy when preparing your taxes.

The key takeaway from this article is to keep records of all your travels—including destinations, distances travelled, and dates—and submit accurate expense reports for CRA mileage reimbursement or claim for a business vehicle allowance as per eligible criteria as soon as possible.

Common questions related to CRA Mileage Rates this 2024 And Tax-Free Vehicle Allowances For Business Travel relate to eligibility criteria for claiming deductions on taxes relating to business trips; applicability of different rates in various provinces/territories; use of technology tools for tracking expenses; etc., all of which have been addressed throughout this article.

It’s also essential to remember that expenses must adhere to guidelines set forth by the Canada Revenue Agency’s prescriptions for deductions to apply on personal income tax filings.

1. What are the CRA mileage rates for business travel?

The Canada Revenue Agency (CRA) sets a mileage rate for business travel for automobile and bicycle use. Currently, the kilometric rate is set at $0.70/km (2024)for taxis, cars or vans leased or owned by employees.

2. How do you calculate vehicle allowances provided by employers through CRA?

To calculate vehicle allowance amounts provided by employers using the CRA mileage rate, multiply an employee’s total business kilometres driven during a given tax year with the corresponding kilometric rate of ($0.70 per km 2024 for the first 5,000km and $0.64 thereafter). This amount should be included in Box 14 on their T4 slip from the employer to declare it as income when filing taxes every year unless the allowance meets certain criteria and is considered “reasonable.”

3 . Are car expenses covered under my prescribed mileage rates allowance?

Yes – once you met CRA’s conditions, reimbursed car expenses such as insurance costs and eligible lease payments are intended to be covered by your prescribed mileage rates allowance according to CRA guidelines.

Are you looking for assistance with your personal or corporate taxes? Look no further than CPA Guide. Our network of top accountants and accounting firms in Canada will help you find the best CPA to suit your needs. Get started today with CPA Guide .