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: Various questions concerning the CRA’s administrative position concerning the reimbursement of computer equipment purchased by employees during COVID-19.
Position: See response.
Reasons: See response.
2020 Canadian Tax Foundation Conference
Question 13: Reimbursement of Equipment
At the April 14, 2020, APFF webinar on tax aspects of COVID-19 measures, the CRA was asked two questions: (1) Is an allowance paid by the employer to an employee for the purpose of acquiring equipment for teleworking a taxable benefit for the employee? (2) Would the CRA’s response be different if the amount paid by the employer is conditional on a proof of purchase being submitted by the employee?
For ease of reference, the April 14, 2020 position can be found in 2020-0845431C6, “Taxable Benefit Working From Home”. In that technical interpretation, the CRA indicated that the allowance is taxable for the employee in the first scenario. In the second scenario, it is a question of fact. In the context of the COVID-19 crisis, the CRA said that it is willing to accept that the reimbursement of an amount not exceeding $500 for the purchase of personal computer equipment will not be taxable if it is mainly for the benefit of the employer.
Would the CRA please indicate whether the $500 reimbursement amount will be increased, and whether increased or not, if its position on the amount reimbursed for the “purchase of personal computer equipment” will be expanded to include the purchase of home office furniture, such as desks, chairs, etc.
In technical interpretation F2020-0845431C6, the Canada Revenue Agency (CRA) outlined its administrative position concerning the tax treatment of employer reimbursements of up to $500 for computer equipment purchased by employees, to enable them to perform their employment duties at home during the COVID-19 pandemic. Employees must submit receipts to support their purchases.
This administrative position will similarly apply to employer reimbursements for home office equipment (for example, a desk, office chair, etc.) purchased by employees.
It should be noted, however, that the $500 reimbursement amount is in respect of each employee rather than each piece of computer or office equipment that an employee may purchase. For example, if an employee purchases a computer for $400 and an office chair for $250, an employer can reimburse the employee up to $500 without the employee receiving a taxable benefit under the administrative position. By contrast, if the employer reimburses the employee the full amount for these purchases, the amount over $500 (that is, $150) must be included in the employee’s income.
While there are no current plans to increase the $500 reimbursement amount, the CRA will continue to carefully monitor all developments relating to the COVID-19 pandemic and will take further action as necessary.
October 27, 2020
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