In our July 13, 2020 article we discussed some of the tax implications that employers should keep in mind when considering providing their employees with equipment and supplies to support productivity while working from home.

At that time, CRA had issued a ruling stating that employers could reimburse employees up to $500 for the purchase of computer equipment to assist employees to work immediately and more efficiently from home. Furthermore, the reimbursement for computer equipment, not exceeding $500, would not be a taxable benefit to the employee.

On October 26, 2020, a CRA/CPA Canada webinar session was conducted where several new positions with respect to employer reimbursements during the COVID-19 pandemic were addressed.

Home office equipment

CRA has broadened the previous position with respect to employer reimbursements of computer equipment. According to this new guidance, employers are also be able to reimburse employees for the cost of office furniture purchased to allow them to carry out their employment duties at home during the COVID-19 pandemic. Examples of additional eligible expenditures that were discussed include items such as chairs and desks.

Consistent with the previous guidance, in order to maintain the non-taxable status of the reimbursements, employees must submit invoices to their employer to support the claims.

Any amounts paid by an employer in excess of $500 must still be included as a taxable benefit to the employee. There is currently no plan to increase the overall $500 threshold amount, however, it was discussed that CRA is monitoring the situation and may make amendments as necessary.

Commuting and parking expenses

CRA also provided some general comments with respect to circumstances where an employee is reimbursed or has received an allowance from their employer for “additional commuting expenses” as well as employer-provided parking at the employee’s regular place of employment during the COVID-19 pandemic. We expect that CRA will publish more formal guidance on these issues. We will provide additional updates as they become available.

For further guidance on the impact of COVID-19 on your specific tax situation, please contact your Shimmerman Penn advisor.