Canada’s statistics agency reports that in April 2020, 3.3 million Canadians had begun to work from home because of restrictions imposed to reduce the spread of COVID-19. The tax department has introduced a simplified process for them to claim home office expenses in order to reduce their tax bill.
If employees worked from home for more than half their hours over at least four consecutive weeks, they will be eligible to claim up to $400. Under this formula, they will not have to get special, detailed forms from their employers. However, people who have bigger claims for home offices can still decide to fill in detailed forms. For that purpose, the Canada Revenue Agency has created less complicated forms as well as a calculator to make the process easier.
Paying taxes is a complicated business
In general, there are many official forms employees must obtain in order to file their annual, complex income tax returns. There are different forms for salaried employees, for freelance work as well as for investment and other types of income. Filling in the papers to file income tax returns is so complicated that many Canadians pay accountants to do the work or use computer programs to help them. And those Canadians living in the province of Quebec have to file a separate provincial income tax return as well as the federal tax return.
Income tax forms are complicated but the government has made it simpler to claim deductions for home offices. (iStock)
Income taxes are progressive, many other taxes are not
Canada has a progressive tax system. That means that those who earn less are taxed at a lower percentage than are those who earn more. For the year 2020, the first $48,535 earned will be taxed at 15 per cent.
The next $48,534 is taxed at 20.5 per cent.
The next $53,505 is taxed at 26 per cent .
The following $63,895 is taxed at 29 per cent and
taxable income over $214,368 is taxed at 33 per cent.
To compare, Canadians in the lowest-income tax bracket pay 15 per cent tax and in the United States, they pay 10 per cent. However, Canadians have a publicly-funded health care system and many society safety nets.
Canadians face many other levies such as gasoline tax, property tax, municipal tax, tax on the purchase of a home (ironically called a welcome tax) and both federal and provincial taxes on most purchases.
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