The COVID-19 health context has substantially altered work organization for a majority of companies and their members. Many employees have been or are being forced to work from home, in “telecommuting” mode.
Employers have also provided in 2020, or will provide in 2021, certain benefits or reimbursements to ensure that their employees work in safe and optimal conditions.
This new reality has tax implications and will impact the tax preparation period for both employee and employer, as well as human resources management.
Telecommuting: tax implications for the employee
Employees who worked from home, more than half the time, for at least four consecutive weeks in 2020 (due to the pandemic) will be able to claim a home office expense deduction on their 2020 tax return.
Each eligible employee will be able to choose between the itemized or flat-rate method to calculate the deduction to which he or she will be entitled.
For the detailed method, the employee must ask his employer to provide him with the standard T2200 form or the simplified version (T2200S) for the federal portion, as well as the TP64.3 form for the provincial equivalent. In the case of the detailed method, employees must calculate their expenses based on the amount of space in their home used for work purposes, and itemize all their expenses, keeping all supporting documents in a safe place. Eligible expenses must be directly work-related (stationery, ink cartridges) and include home-related costs (Internet, long-distance calls, electricity, heating, minor repairs, rent), all as a percentage of office space versus total home space.
For the temporary fixed-rate method, the employer does not need to fill out a form, and the employee does not need to provide justification. He may claim an amount of two (2) dollars for each day he had to work from home, up to a maximum of $400, or 200 days. Again, he must have worked from home for at least four consecutive weeks, but may add subsequent sporadic days if this was the case.
Tax implications for the employer
Employers will have to provide employees who request them with T2200 or T2200S and TP64.3 forms by February 28, 2021. It could be beneficial for the employer to automate the production of these forms for all employees, thus avoiding the need to respond piecemeal to employee requests.
The Canada Revenue Agency has introduced new T4 filing requirements to validate Canada Emergency Wage Subsidy (CESS), Canada Emergency Benefit (CEP) and Canada Student Emergency Benefit (CSERB) payments. For the 2020 tax year, in addition to reporting employment income in box 14 or using code 71, employers will have to use new codes to report employment income and retroactive payments split by period during the year, rather than for the year as a whole.
In the context of telecommuting, Revenu Québec grants an amount of up to $500 that the employer can reimburse to the employee to offset the cost of acquiring computer and/or office equipment (computer, additional screen, printer, work chair, etc.) upon presentation of supporting documentation. This amount is not a taxable benefit. The Canada Revenue Agency applies the same provision, but only to the purchase of computer equipment. At the Canadian Tax Foundation’s national conference on October 27, a CRA official indicated that CRA intends to extend this measure to the purchase of office equipment (furniture). We will follow up on this particular development.
Whether or not there is a pandemic, it is important to note that a fixed allowance without supporting documentation is normally taxable and must be included in the employee’s income.
Telework and human resources – Ergonomics, employee health and safety
When it comes to telecommuting, it’s important that the employer takes care to document and mark out telecommuting, notably through a Telecommuting Policy, to ensure sound management of remote human resources.
Such a policy must include occupational health and safety issues, including workplace layout and ergonomics. The employee’s home office must meet the same health and safety standards as his or her usual workstation in the company. If necessary, the employer can reimburse specific equipment for the layout of the workstation, as indicated in the previous point.
It is also important to define the employer’s requirements of the employee in the context of telecommuting, whether in terms of the availability required on the part of the employee, or the professional objectives to be achieved albeit at a distance.
In this context, the mental health of employees working remotely can become an issue, especially in the case of a second confinement. It is essential for employers to maintain quality contact with their employees. Out of sight, not out of mind!
If an employee’s health is in doubt, he or she should be referred quickly to the appropriate resources. EAPs, Employee Assistance Plans, can be a wise choice, and their contact details should be reminded to employees as part of the telecommuting policy.
Our teams are available to help you
Telecommuting doesn’t seem to be on the verge of extinction – quite the opposite, in fact, even though vaccination has already begun in Quebec.
Amyot Gélinas and its teams are available to help you manage this partial or full-time reality within your organization. Our tax consultants and human capital team are there to support you in each of your challenges.
If you have any questions, please contact a member of our tax team or our Human Capital department.
For more information, we invite you to read on, notably on the websites of theOrdre des comptables agréés, theCanada Revenue Agency or Revenu Québec.
