1. Extension of the 2020 measures regarding home office expenses deduction for employees who worked from home in 2022
Deductions regarding home office employment expenses have been around for several years. To be able to deduct those expenses, eligible employees must first obtain from their employer the signed T2200/TP-64.3 forms. These signed forms allow employees to mainly deduct home office expenses and travel expenses related to the use of a personal vehicle for business purposes in the course of their employment. There is no change at this level for employees who are accustomed to using this deduction.
- Like in 2020, many Canadians have worked from home due to COVID-19 in 2022. To address this situation, the federal government has extended the two calculation methods to claim the deduction for home office expenses originally enforced in 2020. These methods are available to employees who have worked from home more than 50 % of the time for a period of at least 4 weeks without interruption in 2022.
- Detailed method: – The employer must provide the employee with a signed copy of the T2200S/TP64.3 forms to be entitled to this claim method; – The main eligible expenses, in proportion of the space and according to the time in which the living area is used for work, are the following:
| Non-commissioned employees | Commissioned employees | |
| Home Insurance | No | Yes |
| Property Taxes | No | Yes |
| Rent (if the person is a tenant) | Yes | Yes |
| Mortgage interests (if the person is an owner) | No | No |
| Electricity and Heating | Yes | Yes |
| Cleaning, Maintenance and Lighting Products | Yes | Yes |
| Minor Office Repairs | Yes | Yes |
| Office Equipment and Furniture | No | No |
| Internet fees | Yes | Yes |
Taxpayer must keep their receipts as proof of the costs incurred..
- Simplified method: – No form from the employer is needed and no receipts are necessary to claim the deduction when using this method; – Eligible employees will be able to claim a deduction of $2 for each day they worked from home in 2022, up to a maximum of $500, or 250 days. They will not be able to deduct any other employment expenses in 2022 if this method is selected.
Please note that it is unlikely for a taxpayer to have 250 days of work from home in a year, because the number of regular workdays in a year, without vacation, is 252 days[1]. Therefore, we recommend to calculate the number of days worked from home in 2022 in order to use the right number in the calculation of the deduction.
2. Senior Assistance
In 2022, many credits dedicated to seniors were bonified. Here is a summary of all those credits:
- Enhanced Quebec Senior Assistance Tax Credit: it has been increased by $1,600, going from $400 in 2021 to $2,000 in 2022. The maximum amount of credit can be obtained if the family income for a senior is lower than $24,195 for a single person and $39,350 for a couple. The credit is reduced progressively above these amounts. The credit is completely lost when the family income of the senior is above $64,194 for a single person and $119,350 for a couple.
- Enhanced Federal Home Accessibility Tax Credit: it has doubled, going from $10,000 in 2021 to $20,000 in 2022. This credit can be claim for any qualified major renovations that can improve home accessibility for seniors.
- 1 % per year Increase of the Quebec Tax Credit for Home-Support Services for Seniors until 2026. Therefore, the rate for 2022 is 36 %. This credit is available for autonomous and non autonomous seniors
- Increase of the Maximum Eligible Rent in a Rental Property for the Tax Credit for Home-Support Services for Seniors, going from $600 monthly in 2021 to $1,200 in 2022 in the calculation of the eligible expenses. Also, a presumption of an eligible minimal rent of $600 has been adopted for this calculation.
3. Cryptocurrency
In recent years, cryptocurrency has gained in popularity and more Canadians have this type of investment in their portfolio. Since 2020, taxpayers need to declare all cryptocurrency acquisitions and dispositions of any kind in their tax returns.
In addition, the federal and provincial governments have announced that they will pay particular attention to the disposition of cryptocurrency since they are considering it like merchandise and not a currency for tax purposes. The disposition of cryptocurrency can be taxed like a regular income or capital gain depending on the facts of the situation.
You can find more information about cryptocurrency taxation on Revenu Québec’s website. We invite you to get acquainted with the subject by consulting the website and we would like to remind you that it is very important to provide your HNA professional with all the relevant information for your income tax returns if you have held or have sold cryptocurrency in 2022.[2]
4. Enhanced Home Buyers’ Tax Credit
The Federal and the Quebec Home Buyers’ Tax Credits have been increased from $5,000 to $10,000 in 2022, which may now represent a reimbursement of up to $2,752.50. This amount can be shared between spouses.
To be eligible to this tax credit and be qualified as a first-time buyer, a taxpayer and their spouse or common-law partner must meet the following criteria:
- To have acquired an eligible home in the year;
- To not have lived, during the year of acquisition or in the 4 previous years, in another home owed by their spouse or common-law partner.
5. New Underused Housing Tax
Originally announced in the 2021 federal budget, the new Underused Housing Tax (“UHT”)[3] is now in effect and you might be subject to a reporting and/or payment obligation if you own residential properties of 3 units or less that are located in Canada on December 31, 2022.
The first return must be filed by April 30, 2023. Many Canadian taxpayers are subject to the reporting obligation although they might not be liable to pay the tax pursuant to the various exemptions.
Therefore, if you own one or more residential properties other than under your own name (e.g. through a corporation or a trust) or if you are not a Canadian citizen, please contact your HNA professional to determine if you are required to file a return.
The minimum penalty for not filing a UHT return is $5,000. Therefore, it is important to ensure compliance with the new Underused Housing Tax Act.
6. Relevant Information for 2023
Here is additional relevant information for 2023:
New Rules on the Sale of Immovable Property Within 365 days of Acquisition
Starting January 1st, 2023, any gain resulting from the disposition of a residential property that has been owned by a taxpayer for less than 365 consecutive days will be deemed to be business income and not capital gain and therefore, may not be eligible for the principal residence exemption. Please note that exceptions may apply to certain situations, such as death or breakdown of a marriage or common-law relationships.
Tax-Free First Home Savings Account (TFHSA)
Starting April 1st, 2023, individuals will be allowed to open and contribute to the new TFHSA if they qualify as first-time home buyers. The maximal annual contribution will be of $8,000, for a cumulative maximum of $40,000. The TFHSA contributions will be deductible against the contributor’s income and the revenues generated by the account will not be taxable. The qualifying withdrawals to buy a qualifying home will also be non-taxable.
Here are the criteria to open an account:
- To be an individual of at least 18 years of age and a resident of Canada;
- To be a first-time home buyer, which means that the taxpayer or their spouse or common-law partner have not owned a qualifying home used as a principal place of residence at any time in the year the account is opened or in the preceding four calendar years.
[1] 52 weeks x 5 days minus 8 mandatory holidays in Quebec = 252 days
[2] https://justepourtous.revenuquebec.ca/en/subjects/cryptocurrency/
[3] https://www.canada.ca/en/services/taxes/excise-taxes-duties-and-levies/underused-housing-tax.html
*Please note that these are only some of the new measures announced by the tax authorities in 2022. Other new measures may apply to your situation. Please contact your HNA professional
for more details.
