We often get asked by pharmacists who are employees, working at a pharmacy or another business, about whether they can claim home office expenses.
The rules for claiming home office expenses are different for employees compared to business owners or self-employed people, so it is important to make sure you are following the right ones.
Who Can Claim Home Office Expenses? Circumstances When Pharmacy Employees May Be Able to Claim Expenses
Pharmacists employed in various roles may be eligible to claim home office expenses, but it depends on their specific circumstances; it is important to confirm eligibility before trying to claim these.
For those who work in community pharmacies, they are typically working in the store under normal circumstances, not at home, so are recommended to not try to claim home office expenses as they won’t meet eligibility requirements.
If you are a clinical pharmacist, working as an employee of a pharmaceutical company or employed in a business-oriented position for a large retail pharmacy chain, you may be performing business-related tasks from home. In this case, you can consider claiming home office expenses.
If you are involved in investment activities, manage rental properties, or have a holding company with passive investments, and you work from home to manage these side businesses, you may be eligible to claim home office expenses for these only. This also applies to any other business where you work at least 50% or more of your time from home. However, in these cases, you need to claim these home expenses as a self-employed individual or business owner and follow those rules.
If You Performed Work for Your Employer from Home
For salaried or commissioned employees, there are some restrictions when it comes to claiming home office expenses. You can only claim these expenses if they are required by your employer and your employer has not reimbursed you. Your employer must certify this obligation using Form T2200, Declaration of Conditions of Employment. Again, be aware you can’t make the same tax deductions that self-employed persons can.
Determining Work Days at Home
When calculating your home office expenses, you need to know what counts as a work day at home. Days that you worked full-time hours or part-time hours from home do count. However, you cannot count days off, such as weekends and statutory holidays when you did not work, vacation days, sick leave days, or any other leave of absence days.
Claiming Home Office Expenses
You may have heard of a flat rate method for claiming home office expenses, where you don’t need to calculate your exact expenses. However, this method was temporary and applied only during the COVID-19 pandemic from 2020 to 2022; it was aimed at streamlining the process for those who were temporarily working from home because of Covid. Pharmacists generally continued to work at their regular business location during this time, so do not qualify for this flat rate.
Pharmacy employees with eligible reasons to claim home expenses will need to follow the full, detailed method of calculating their claims.
Home Office Expenses for Employees
If you do work for your employer from home and aren’t reimbursed, you may be able to claim certain home office expenses as an employee; this includes work-space-in-the-home expenses, office supplies, and certain phone expenses. These deductions can reduce your overall income tax liability.
You can claim a portion of certain expenses related to the use of a workspace in your home. This applies to all salaried employees and commission employees. Eligible expenses include:
- Utilities portions (electricity, heat, and water) of condominium fees
- Home internet access fees
- Maintenance costs, including minor repair costs
Commission employees can also claim home insurance, property taxes, and necessary equipment leases.
Salaried and commission employees cannot claim expenses like mortgage interest, principal mortgage payments, home internet connection fees, office equipment and furniture such as office chairs, or capital expenses like replacing flooring.
You can only claim expenses for the time you worked from home. Also, the amount you can claim is limited to your employment income after deducting all other employment expenses. Any unclaimed expenses can be carried forward to the next year as long as you’re still reporting income from the same employer.
To calculate the portion of expenses you can claim, you need to determine the area of your home used for work and the amount of time it’s used for work. The Government of Canada provides a calculator and guidelines to help with this calculation.
Office Supplies and Phone Expenses
If you have to pay for office supplies or certain phone expenses as part of your work for your employer, you may be able to claim these costs. However, these expenses are separate from the physical workspace expenses and need to be claimed in a different section of your tax return.
Get Professional Guidance
As a pharmacy employee, you may be eligible to claim home office expenses to reduce your overall income tax liability but you need to follow the specific guidelines and rules related to these claims to ensure compliance with the tax regulations.
Knowing what you can claim can be complicated. It’s easy to miss an opportunity, claim something you aren’t eligible for, or choose one strategy when another could have earned you more income tax back. Getting professional guidance for your individual situation can ensure you maximize all of the possible deductions you are eligible for.
Pharma Tax offers tailored tax planning and consultation services, and specializes in helping pharmacists. We tailor plans for you, and develop strategies to reduce your tax liability. We’ll explain what you might be eligible for, and why, so you are empowered with your own taxes and finances.