Employees in Canada can deduct part of their home office costs only if their employer requires them to work from home and pay those costs, and confirms it on a signed Form T2200. The temporary flat-rate method of the pandemic years ended with the 2022 tax year, so employees now use the detailed method with receipts. Self-employed people follow different rules on Form T2125. Here is who qualifies, what counts and the records to keep.
Part of our passage on work from home jobs in Canada.
Note: general information for the 2025 and 2026 tax years, not tax advice. Rules are set by the Canada Revenue Agency; check the CRA’s current guide for employment expenses (T4044) or ask a tax professional for your situation.
Who can claim home office expenses as an employee?
You can claim if all of these are true for the tax year:
- Your employer required you to work from home – in your written contract or a verbal agreement. Choosing to work from home when an office is available does not qualify.
- You had to pay the expenses yourself and were not reimbursed for them.
- The workspace test: the space is where you mainly (more than 50% of the time) worked for at least four consecutive weeks in the year, or you used it only to earn employment income and regularly to meet clients or customers.
- Your employer signed Form T2200 (Declaration of Conditions of Employment). You keep it in your records; you don’t send it with your return unless the CRA asks.
Since the 2023 tax year, employees use the detailed method: actual costs, receipts, and the expenses calculated on Form T777. The $2-a-day flat rate applied only to 2020, 2021 and 2022.
Which expenses can employees claim?
| Expense | Salaried employee | Commission employee |
|---|---|---|
| Electricity, heating, water (workspace share) | Yes | Yes |
| Rent (workspace share) | Yes | Yes |
| Maintenance and minor repairs (workspace share) | Yes | Yes |
| Home internet – monthly fee (work-use share) | Yes | Yes |
| Office supplies used up directly in work (paper, ink, postage) | Yes | Yes |
| Home insurance and property taxes | No | Yes (workspace share) |
| Mortgage interest and mortgage principal | No | No |
| Furniture, computers, phones (purchase) | No | Lease costs only, in some cases |
Internet installation fees, the cost of buying a computer and the bundled phone part of a plan are not deductible for salaried employees. A cell phone’s work minutes may be claimable if the T2200 says you had to use your phone for work.
How do you calculate the workspace share?
- Measure the area. Workspace area divided by the finished area of the home (hallways, kitchen and bathrooms count in the total). Example: a 10 m² office in a 100 m² apartment = 10%.
- Adjust for shared use. If the space is also a guest room or dining room, reduce the share by the hours it is used for work out of the total hours in a week.
- Apply the share to each eligible cost. Example: rent of $2,000 a month for 12 months = $24,000 × 10% = $2,400.
- Add the work-use share of internet (for example 40% of the monthly fee if that reflects your work use) and supplies.
- Subtract reimbursements your employer paid and enter the result on Form T777.
Home office expenses cannot create or increase a loss from employment. Any amount you couldn’t deduct can be carried forward to a later year in which you have income from the same employer.
What if you are self-employed?
Freelancers, virtual assistants and contractors claim business-use-of-home expenses on Form T2125 with their business income. The test is similar – your home is your principal place of business, or you use the space only for business and regularly meet clients there – but the list is wider: the business share of utilities, rent, home insurance, property taxes and mortgage interest (not principal) can be claimed. Like employees, you cannot use home office costs to create a business loss; unused amounts carry forward.
Self-employed people also deduct genuine business expenses outside the home office share: software subscriptions, a portion of the phone and internet, professional fees and equipment through capital cost allowance. Our article on becoming a virtual assistant in Canada covers the business set-up side.
Which records should you keep, and what goes wrong?
- Keep for six years: the signed T2200, receipts and bills, your floor-area calculation, and a note on how you estimated internet work use.
- Get the T2200 early: employers often issue them in February; ask HR if you don’t receive one.
- Don’t claim what was reimbursed: internet or equipment allowances paid by your employer reduce your claim.
- Don’t claim the whole home: only the workspace share – and for shared rooms, the work-hours share.
- Remote contractors: if you are paid as an employee but sign as a “contractor”, or the reverse, sort out your status first – it decides which form you use.
Official details are on the Canada Revenue Agency website (search “home office expenses for employees” and “business-use-of-home expenses”).
More on this passage: employee vs. contractor, your rights at home and where to find remote jobs are covered in work from home jobs in Canada.
