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Remote work policies change your accounting in three places: who can claim home office costs, which province’s tax you withhold, and what records you keep. Since 2023 an employee who works from home has to use the detailed method, which needs a form T2200 signed by you, the employer, so a policy that ignores the form creates a problem on the first tax return.
Do you have to sign a T2200 for remote staff?
You don’t have to, but your people can’t claim home office costs without it. The CRA’s detailed method asks for a signed Form T2200 and for the employee to have worked more than 50% of the time from home for at least four consecutive weeks in the year. The old temporary flat rate is gone too: the CRA’s page on home office expenses for employees says it doesn’t apply to 2023 and later years.
So the policy question is simple. Do you sign for everyone who meets the test, or decide case by case? Case by case is fine, but write the rule down before the requests arrive in February. Staff who can’t claim will ask why a colleague could.
A quick example of the 50% test: Mei works from home Monday and Tuesday and comes in the other three days. That’s 40% of her time at home, so she doesn’t meet it, and there’s nothing for you to sign. Her coworker Luc is home four days out of five, which is 80%, so he does.
What can a remote employee claim, and what can’t they?
This is where most policies go vague. The CRA lists what counts under the detailed method, and the list is shorter than people expect.
| Expense | Employee can claim |
|---|---|
| Electricity, heat, water | Yes |
| Home internet, monthly plan | Yes |
| Rent (renters only) | Yes |
| Maintenance and minor repairs | Yes |
| Home insurance, property tax | Commission employees only |
| Mortgage interest or principal | No |
| Desk, chair, lamp | No |
| Computer, printer, monitor | No |
One more rule matters for you. Anything you reimburse can’t be claimed by the employee as well. If you pay part of an internet bill, tell staff that only the unpaid part is theirs to deduct. Say the plan costs $90 a month and you cover $40. Only the other $50 is open to a claim, and then only for the share used for work.
Which province do you withhold for?
Not automatically the one where the employee’s kitchen table sits. The CRA says the province of employment is where the employee reports for work, and that a home office is generally not an employer establishment. It also says you can’t attach someone to an establishment just to avoid source deductions somewhere else.
Does the difference matter in dollars? A little. For an employee paid $2,500 every two weeks, the payroll remittance calculator shows $753.34 to remit in Ontario and $739.73 in Alberta. That’s $13.61 a pay period, all of it income tax. CPP and EI come out identical at $140.74 and $40.75. The gap is small. Over 26 pay periods it adds up to about $354 for that one employee, and it grows with every remote hire.
A full-time remote hire in another province is the case to look up. The CRA has a page on determining the province of employment, so read it before the first pay run, not after.
What should the policy say in writing?
Keep it to a page. Who qualifies for a signed T2200, and who decides. How reimbursements work, so staff know what you’ll cover and what they can still claim. Which province’s payroll rules apply to each remote hire, with the date someone checked. And where the signed forms are filed. A page like that, handed out in the first week, answers most of the questions before they come up in February.
What should the records look like?
Keep the signed T2200 with the payroll file. The CRA asks employers and taxpayers to keep records for six years from the end of the last tax year they relate to, and that includes the reimbursement logs you’ll build once staff start sending receipts.
Check each employee’s net pay too. The take-home pay calculator is useful when a remote hire asks what a salary leaves after tax, and the tax credits calculator covers the federal credits they may be missing.
The sources behind this page
The home office rules and the province of employment wording come from CRA pages on claiming home office expenses and payroll set-up, read in September 2026. The record-keeping period is from CRA guide RC188. The payroll figures are from our payroll remittance calculator using 2026 rates. No 2026 return dates were published on the CRA pages I read, so none are stated here. This site isn’t a government service and doesn’t speak for one.
Frequently asked questions
Can I deduct a flat amount for working from home?
Not for 2023 and later years. The CRA says the temporary flat rate method doesn't apply to those years, so employees use the detailed method with actual costs.
Does an employee need a T2200 to claim home office expenses?
Yes, for the detailed method the employee needs a completed and signed Form T2200 from the employer, and should keep a copy.
Can an employee claim a desk or a monitor?
Not as a home office expense. The CRA lists furniture and equipment purchases among things that can't be claimed under this method.
Which province's rates do I withhold for a remote worker?
Use the province of employment, which is where the employee reports for work. The CRA notes that a home office is generally not an employer establishment.
How long do I keep payroll and T2200 records?
Six years from the end of the last tax year they relate to, unless the CRA has given you permission to destroy them earlier.
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