A Complete Guide to the Form T2200 and Home Office Expense Deductions

The 2024 tax filing season is here, and employees earning employment income may be eligible to claim home office expense deductions or other employment expenses using the T2200 Declaration of Conditions of Employment. The Canada Revenue Agency (CRA) has made updates affecting eligible employees who work remotely or under a formal telework arrangement.

For the 2024 taxation year, the temporary flat rate method is no longer available. Instead, employees must use the detailed method to calculate eligible home expenses such as utilities, home insurance, and property taxes (so wave goodbye to the temporary flat rate method).

To claim expenses, employees need a completed and signed copy of Form T2200 from their employer. This form confirms that certain expenses were required to pay as part of their employment.

Eligible employees must meet the following conditions:

• Work at least 50% of the time in a work space at home for a period of at least four consecutive weeks under a written or verbal agreement.
• The work space must be used on a regular and continuous basis for employment, including in-person meetings or remote work arrangements voluntarily entered into with their employer.

Employees can also claim motor vehicle expenses or travel expenses incurred while fulfilling their conditions of employment if supported by the T2200 form. For employers, the CRA now accepts electronic signatures on completed forms, simplifying the process for providing the T2200 Declaration of Conditions to employees.

Whether you’re claiming home office expenses, employment expenses, or both, understanding eligibility criteria is critical. Employees should retain records of eligible expenses and consult with tax professionals or review CRA resources to ensure compliance.

These updates highlight the importance of proactive planning during the 2024 tax filing season​. Read on for all of the important details.

What Is Form T2200?

The T2200 Declaration of Conditions of Employment Form, issued by the Canada Revenue Agency, allows employees earning employment income to claim eligible employment expenses on their tax returns. This form is critical for those seeking to deduct home office expenses, motor vehicle expenses, or other costs related to their employment under specific conditions of employment.

Employees are limited in the deductions they can claim compared to self-employed individuals. To deduct employment expenses or claim home office expenses, an employee must have a completed and signed copy of Form T2200 provided by their employer. This document certifies that the expenses were required to pay as part of their job and were not reimbursed. For employees in Quebec, the equivalent form is TP-64.3-V for General Employment Conditions.

Employers must ensure the T2200 form is accurate and meets the eligibility criteria established by the CRA, which may involve verifying that the employee uses a work space at home on a regular and continuous basis for at least four consecutive weeks or more than 50% of the time for employment duties such as in-person meetings or remote work under a formal telework arrangement.

Why is Form T2200 Important?

The T2200 form is essential for employees seeking to reduce their income tax liability by claiming home office expense deductions and other expenses related to their work. By submitting this form along with their tax return, employees prove to the CRA that the claimed deductions, such as home insurance, property taxes, or travel expenses, are valid and job-related.

Employees legally entitled to these deductions—such as those working remotely or in field-based roles—are also entitled to receive a T2200 form from their employer if the expenses were incurred due to the arrangement with their employer’s requirements.

Who Should Use Form T2200?

The T2200 form is designed for employees who must cover specific costs to perform their jobs and are not reimbursed by their employer. These costs may include home office expenses, motor vehicle expenses, and travel expenses. Examples of eligible employees include:

• salespeople who regularly meet clients
• remote workers under an agreement with their employer
• tradespeople who incur job-specific costs
• employees using their personal devices for work-related activities

Employers should provide this form when employees satisfy the conditions of employment, such as maintaining a work space at home for at least four consecutive weeks during the 2024 taxation year. With the updated form and CRA guidelines now accepting electronic signatures on completed forms, the process has become more streamlined for both employers and employees

What’s in the Form for the T2200 Tax Year?

For employees incurring employment expenses or employees working remotely, the T2200 Declaration of Conditions of Employment Form is an essential document. Employers must provide this form, detailing the employment-related expenses an employee is required to pay and any allowances provided during the tax year. This ensures employees can properly claim home office expenses or other eligible expenses on their income tax returns.

Sections of Form T2200

• Part A collects basic employee information, including their name, job title, work address, and employment contract details.
• Part B features 13 questions evaluating the employee’s responsibilities and eligibility to deduct expenses. A key question asks if the employee’s contract required them to incur costs while performing their employment duties. If the answer is “no,” only the employer declaration section is completed. If “yes,” the entire form must be completed to enable the employee to deduct these expenses.

Eligibility Criteria and Key Considerations

For employees to claim deductions for home office expenses, such as utilities or home insurance, the following conditions apply:

• The employee must use a work space at home for at least four consecutive weeks or 50% of the time for employment duties under a written or verbal agreement with their employer.
• The form must include a completed and signed copy by the employer, which can now include an electronic signature for convenience.

Pay Special Attention to Item 9

Item 9 on the T2200 form requires employers to specify any expenses related to work that were reimbursed to the employee. Employees must avoid claiming reimbursed expenses on their tax return, as this could result in penalties from the Canada Revenue Agency (CRA). Employers should ensure the accuracy of this section to prevent errors during the tax filing season.

By properly completing the T2200 form, employees and employers can confidently navigate the updated 2024 taxation year guidelines while ensuring compliance with CRA requirements​

How Do I File Form T2200?

The T2200 Declaration of Conditions of Employment Form is a vital document for employees who need to deduct employment expenses. Although the Canada Revenue Agency (CRA) does not require the completed and signed form to be submitted with an employee’s tax return, it must be retained by the employee and presented if the CRA requests it.

Employees must also complete the T777 Statement of Employment Expenses to itemize their eligible expenses, such as home office expenses or motor vehicle expenses, and submit this form with their income tax return. The T777 must be filed annually during the tax filing season.

To simplify the process, employers often provide the completed and signed T2200 form along with T4 slips before the end of February. Both the employer and the employee must ensure the form is accurate, supported by a written or verbal agreement, and consistent with the conditions of the employment contract. Any false statements could result in penalties from the CRA.

Employees should keep detailed records of the expenses related to their employment income, such as receipts and contracts, and consult a tax professional to confirm eligibility for deductions.

What Employment Expenses Can My Employees Claim?

When the CRA reviews your employees’ tax returns, the only expenses that are eligible for tax deductions are the ones that you approve—even if they paid more out of pocket to earn their income.

The expenses that most qualifying employees will incur include vehicle expenses, work-related entertainment purchases, and office rent (or a portion of their total home expenses if they work from home regularly).

We’ve listed some of the most common expenses that employees claim below, but the CRA also offers deductions for other employment expenses. Check out the T77 for the full list. For more details on home office expenses specifically, you can also check out the information provided on the CRA website.

Accounting Fees

Employees can deduct fees paid to an accountant to file their T777 with their tax return.

Advertising Fees

Commission-based employees can claim expenses used to advertise for their work. Salaried employees, on the other hand, cannot.

Allowable Motor Vehicle Expenses

If your employees received a nontaxable allowance for their vehicle but incurred expenses greater than that allowance, they can deduct those additional automobile expenses. Additionally, they can also claim a capital cost allowance for the vehicle they use to earn their income.

Computers, Cell Phones, and Other Equipment

Although the CRA doesn’t allow employees to deduct the cost of buying a computer or business cell phone, they can deduct the cost of leasing them from their taxable income.

Entertainment Expenses

Commissioned employees can deduct 50% of their food, beverage, and ticket expenses while entertaining clients. However, keep in mind that club membership fees and the costs associated with a yacht, camp, or golf course don’t count as deductible expenses.

Food and Beverages Expenses

Employees can claim 50% of their meal expenses if they’re required to be away from home (and away from the municipality they live in) for 12 hours or more.

Licences

Employees who need licences to do their work, such as real estate agents, can deduct their annual licensing fees from their taxable income.

Lodging Expenses

If you require your employees to travel for their work, they can claim their lodging costs as an expense.

Medical Underwriting Fees

Employees who pay for certain exams—like X-rays and heart diagrams—to underwrite your customers’ risks can deduct these work expenses with T2200.

Office Rent or Home Office Expenses

Employees who work from home can deduct home office expenses such as rent, heating, utilities, and repair costs for the area of their house they use to earn income. Employees who work on a commission basis are also allowed to deduct the insurance costs and property taxes related to that area.

Parking

Commission-based employees can deduct work-related parking expenses from, say, meeting a customer at their office or working at an offsite location. However, parking fees incurred from working at your place of business aren’t eligible for this deduction.

Special Clothing

As a general rule, employees can only deduct clothing expenses if they can’t wear the items outside of work. But if you require them to buy a costume, special shoes, or items of clothing that can’t be worn outside of work, they can deduct those specific unreimbursed expenses.

Tools

Certain workers, such as apprentice mechanics and tradespeople, can deduct the cost of the tools they buy to do their work.

Training Costs

Employees who must pay for training courses in order to perform their jobs can deduct those costs with the T2200.

Travel Costs

Commission-based employees can deduct their work-related travel fares from their income.

Streamlining the Use of Form T2200

Filling out and providing the T2200 form promptly helps employees save money on taxes and ensures compliance with CRA regulations. By certifying their eligible home office expenses, employment expenses, and other expenses related to their job, employees can claim home office expenses effectively and reduce their tax liability—all it takes is a completed and signed form.

For more detailed information on eligible deductions, employees can consult the CRA’s guidelines or refer to the T777 form to understand specific criteria for the 2024 taxation year.

This post was updated in December 2024.