Its a good news for those who are told by their employer to work from home because of COVID 19 and have spent money to buy equipments to be work ready from home.

Although reimbursements from employers are taxable to employees, but this is an exceptional case because of COVID, now if an employee is working from home and has spent more than $500 to purchase equipments (chair, table, or computer) to enable working from home and employer is reimbursing the cost of equipments, taxpayer doesn’t have to report this on his/her tax return.

That’s not all, as government doesn’t allow many deductions to tax payers, so to control this they put a cap on the amounts which can be claimed on the tax returns.

In this particular scenario the cap is $500, for tax free reimbursements.

Let’s take an example:

MANJIT (employée) is working for Dreams Job Inc. (Employer), because of COVID company told employees to work from home. Also, told employees to buy equipments to enable then work from home and company will reimburse those costs, as long as MANJIT provides legitimate proof of purchases to the employer.

Because this is the first time MANJIT is working from home, he had to purchase following equipments to start working from home.

• A desk: $150
• A chair: $100
• Personal computer: 600

Total MANJIT has to spend 600 + 150 + 100 = $850.

Now there can be two scenarios of reimbursements by employer.

First, if Employer reimbursed $500 out of $850, then MANJIT doesn’t have to report any amount on his tax return, as $500 maximum tax free reimbursement is allowed by the CRA.

Second, if employer reimbursed full $850, then MANJIT has to report $350 (850 – 500) on his tax return as taxable amount of reimbursements, as MANJIT can only claim maximum $500 tax free reimbursements.

If you require more information on this or need any tax advise, feel free to contact us at 647-784-5708 or Info@profiletax.ca.