Consultation on the simplification of Form T2200, Declaration of Conditions of Employment, as a response to the COVID-19 pandemic

The COVID-19 pandemic has resulted in many Canadian employees working from home to help minimize the spread of the virus, raising questions about how salaried and commissioned employees affected by the new realities can claim work-space-in-the-home and supplies expenses, on their 2020 T1 Individual Income Tax and Benefit Return.

The COVID-19 pandemic has resulted in many Canadian employees working from home to help minimize the spread of the virus, raising questions about how salaried and commissioned employees affected by the new realities can claim work-space-in-the-home and supplies expenses, on their 2020 T1 Individual Income Tax and Benefit Return.

One of the requirements is that Form T2200, Declaration of Conditions of Employment,must be completed and signed by an employer, to enable their employee to claim certain employment related expenses (including work-space-in-the-home expenses and supplies) on line 22900 of their Individual Income Tax and Benefit Return.

In an effort to make it easier for employers to complete Form T2200, the Canada Revenue Agency drafted an early version of the simplified Form T2200(also referred to as Form T2200 Short) and engaged with stakeholder organizations including employers, the payroll industry, and tax professionals for their feedback. The consultation period took place between August 24 and September 18, 2020. The version of T2200 Short that was available at that time has since been modified.

What we heard

Ideas and input were sought around three topics:

1. How to clearly communicate the rules for employees who wish to claim supplies and work-space-in-the-home expenses within the COVID-19 context
2. An exploration of general feedback on the draft Form T2200 Short
3. An exploration of opportunities to collaborate on communicating, and amplifying messaging about the application of rules related to the T2200 forms (standard and short).

Importantly, the consultation was focused solely on feedback related to administrative solutions, as the requirement for the T2200 form is a legislated requirement under the Income Tax Act.

Stakeholders shared several key points of concern related to the early draft of the T2200 Short.

• The requirement of a T2200 could be too much of an administrative burden on employers because verifying the conditions, storing and signing the form is highly labour intensive, especially for employers with a large number of employees.
• Completion of the T2200 Short may have a high margin of error and unintentionally lead to perceived or actual unfairness due to the many technical terms and definitions on the forms that may cause confusion, and the complexity of application of the rules and eligibility of expenses (for example, with multiple people working from the same home).
• Greater emphasis is needed on communicating guidance, including providing tangible examples, outreach, education, opportunities to have questions answered and communication targeted to specific employee and employer industries or audiences.