Work-from-home tax deduction could cost feds $260 million in lost revenue, PBO says

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OTTAWA — The parliamentary budget officer says the federal government could lose out on $260 million from a simplified federal tax measure to let Canadians write off working from home due to the pandemic.

Workers who have been able to do their jobs remotely have been asked to do so since the spring as part of public health efforts to slow the spread of COVID-19.

That has meant many are incurring costs at home that their employers would normally pick up.

Normally, writing off home office expenses on tax returns requires detailed calculations and additional tax forms, but the Liberals have sought to simplify the issue and let Canadians claim deductions up to $400 depending on how many days they worked from home in 2020.

Drawing on tax data from 2018, the PBO found the number of people who wrote off home offices on their taxes amounted to about 10 per cent of those who worked from home and those people deducted about $1,550 on average.

The report from budget officer Yves Giroux says the number of people claiming the deduction is likely to skyrocket this year.

The PBO report anticipates that more renters will file for deductions using the more complicated approach because they can claim the cost of rent, while homeowners may opt for the simplified method because they can’t claim mortgage or capital costs.

The estimate of $260 million in forgone tax revenue would hit the government’s bottom line in this fiscal year, which closes at the end of March.

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