20 July 2009 Ministerial Correspondence 2009-0325851M4 - Form T2200 - Home Office Expenses

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: 1. What is the purpose of Question 10 of the Form T2200?

2. Does the addition of this question to the Form T2200 coincide with a change in legislation or policy with respect to the deductibility of home office expenses?

Position: 1. To determine, on a prima facie basis, whether an employee meets the conditions outlined in subsection 8(13) of the Income Tax Act ("the Act").

2. No.

Reasons: 1. Home office expenses deductible under paragraph 8(1)(i) or 8(1)(f) of the Act must also satisfy the additional requirements outlined in subsection 8(13) of the Act. In order for an employee to claim a deduction for home office expenses under either paragraph 8(1)(i) or 8(1)(f) of the Act, a completed form T2200 is required. Subsection 8(10) of the Act indicates that by signing the form, the employer certifies that the employee meets the conditions set out in these provisions. However, for the employee to claim the deduction, he or she must be able to demonstrate that the requirements of the Act have been met.

2. Although the T2200 was amended to include questions to clarify whether an employee met the conditions in subsection 8(13) of the Act, this provision was implemented effective on or after the 1991 taxation year and accordingly does not represent a change in legislation or policy regarding the deductibility of home office expenses.

July 20, 2009

XXXXXXXXXX

Dear XXXXXXXXXX :

The office of the Honourable James M. Flaherty, Minister of Finance, forwarded to me a copy of your correspondence addressed to XXXXXXXXXX , which I received on June 4, 2009, concerning the interpretation and completion of question 10 on Form T2200, Declaration of Conditions of Employment, with respect to home office expenses.

Form T2200 is a multi-use form required under the Income Tax Act that must be certified by an employer to support an employee's claim for a deduction of various expenses, including those relating to a home office. The view of the Canada Revenue Agency (CRA) on the deductibility of home office expenses is explained in Interpretation Bulletin IT-352R2, Employee's Expenses, Including Work Space in Home Expenses, which is available on the CRA Web site at www.cra.gc.ca/E/pub/tp/it352r2.

Home office expenses can only be deducted if the taxpayer meets the conditions described in subsection 8(13) of the Act. As outlined in paragraph 2 of the interpretation bulletin, to deduct home office expenses under this subsection, the work space must either be:

• the place where the individual principally (more than 50% of the time) performs the office or employment duties; or
• used exclusively during the period to which the expenses relate to earn income from the office or employment and, on a regular and continuous basis, for meeting clients or other persons in the ordinary course of performing the office or employment duties.

Therefore, an employee must meet one of the two abovementioned conditions in order to deduct home office expenses.

You express concern that question 10 of Form T2200 has changed and that this revision has caused confusion about an individual's eligibility to deduct home office expenses in circumstances in which they were previously believed to be deductible. Although Form T2200 has been amended to include questions to clarify whether an employee has met these conditions, subsection 8(13) of the Act was implemented effective for the 1991 and subsequent tax years and accordingly does not represent a change in legislation or policy regarding the deductibility of home office expenses. I can confirm that the purpose of question 10 on the form is to determine whether an employee meets the conditions outlined in subsection 8(13) of the Act.

I trust the information I have provided is helpful and appreciate the opportunity to respond to your concerns.

Sincerely,

Jean-Pierre Blackburn, P.C., M.P.

Renee Sigouin
(613) 957-2128
2009 - 032585