20 September 1996 Internal T.I. 9620507 - OFFICE IN THE HOME 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.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

1.Whether Form T2200 should be certified where an employee is on disability leave but continues to make available work space in the home.

2.Is the employee on disability leave eligible to claim a deduction in respect of these work space in the home expenses?

3.Whether the provisions of subsection 8(13) of the Income Tax Act (the Act) need to be considered by an employer in determining whether to certify Form T2200 with respect to work space in the home

Position:

1. Question of fact.

2. No.

3. No

Reasons:

1.The terms of the employment contract will indicate if there is a requirement that the employee establish and use a work space in his or her home while performing or while not performing the employment duties.

2.Since the employee is not in service of insurer, no deductions against the disability income. Since employee while on disability leave not performing the required duties of employment does not meet the requirements of 8(1)(i)(iii) or 8(13).

3.Subsection 8(10) of the Act which deals with certification does not require subsection 8(13) of the Act to be considered.

								September 20, 1996

	Toronto Centre Tax				HEADQUARTERS
	  Services Office
	Client Services Division			D. Zion
(613) 957-8953
	Attention: Athan Margaritis
								962050

Office in the Home Expenses - XXXXXXXXXX

This is in reply to your correspondence of June 5, 1996, and further to our subsequent telephone conversation (Zion/Margaritis), in which you requested our comments concerning the entitlement of XXXXXXXXXX to a claim for office in the home expenses. XXXXXXXXXX employer, XXXXXXXXXX, has questioned the appropriateness of his entitlement to claim expenses for an office in the home and consequently, their provision of a signed certification.

As we understand the situation,

XXXXXXXXXX

It is a condition of employment that XXXXXXXXXX provide an office in the home and operate from his home. Accordingly, the employer has, in the past, certified in prescribed form (T2200) that the conditions for deducting office in home expenses have been met. XXXXXXXXXX performed his employment duties for XXXXXXXXXX at which time he went on sick leave until XXXXXXXXXX Since that time, XXXXXXXXXX has been on disability leave and is in receipt of disability payments. He has informed XXXXXXXXXX that since he is still an employee of XXXXXXXXXX he must continue to provide work space in his home in order to perform certain duties such as the receipt and filing of employment related mail which is still sent to his home. We have made the assumption for the purposes of our discussion that these disability payments are received from an insurer and included in XXXXXXXXXX income pursuant to paragraph 6(1)(f) of the Income Tax Act.

Our Comments

In XXXXXXXXXX situation, a claim for office in the home expenses would be made under subparagraphs 8(1)(i)(i) and (iii) of the Act. The latter provision restricts claims to the cost of supplies which were consumed directly in the performance of his duties of employment, while both provisions specify that the employee be required by his contract of employment to incur the expenses. Paragraph 8(13)(a) of the Act sets out conditions that must be met in order to make a claim under paragraph 8(1)(i) of the Act. In the case of XXXXXXXXXX, it is our view that he would have to have a "work space" where he "principally performs the duties of the office or employment" pursuant to subparagraph 8(13)(a)(i) of the Act.

In addition to the foregoing, subsection 8(10) provides that an otherwise deductible claim is not permitted unless a prescribed form (T2200), signed by the employer, accompanies the claim certifying that the requirements of paragraph 8(1)(i) of the Act have been met. The T2200 simply asks the employer whether the employee was required under a contract of employment to use a portion of his or her home. If there is, in fact, a contract or agreement between the employer and the employee which sets out the use of the home work space as one of the conditions of employment (whether part of the main contract or a separate agreement), then the employer may so certify. The Act does not require the employer to consider whether an employee performs the duties of the office or employment "principally" in that office for the purposes of completing a T2200. Accordingly, depending on the terms of the employment contract, a T2200 certification could be provided to XXXXXXXXXX in the circumstances under review. We would recommend, however, that XXXXXXXXXX indicate the period of time that XXXXXXXXXX was obligated to perform his regular duties of employment (XXXXXXXXXX) on the T2200.

There also remains the question of whether XXXXXXXXXX is precluded from claiming a deduction based on the factual use of the work space in his home. Although XXXXXXXXXX may be, or feel, obligated to continue to perform certain minimal employment duties for XXXXXXXXXX while he is on disability leave, it is our opinion that, during this time, he cannot be considered to be principally performing his employment duties as required by subparagraph 8(13)(a)(i) of the Act. However, in circumstances where an employee satisfies the eligibility criteria for a portion of the year, a reasonable claim in respect of that portion will be permitted. Consequently, it is our view that the condition described in subparagraph 8(13)(a)(i) of the Act was satisfied for the use of the work space in his home for that period of time in XXXXXXXXXX when XXXXXXXXXX was not on disability leave.

We trust that our comments will be of assistance in replying to XXXXXXXXXX.

John F. Oulton
Section Chief
Business, Property & Personal Section
Business and Publications Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch