Canadian employees and self-employed workers can both deduct home office expenses, but with different rules.
Employees (T2200)
Must have form T2200 from your employer confirming the work-from-home requirement. Can deduct utilities, supplies, and a portion of rent. Cannot deduct mortgage interest, property tax, home insurance, or principal repayment.
Self-Employed
Can deduct a pro-rated portion of all home expenses including mortgage interest, property tax, home insurance, utilities, and rent. Cannot create a loss, any unused deduction carries forward.
The flat-rate method is gone
The $2/day flat-rate method used during COVID ended in 2023. All claims now require detailed expense tracking and Form T2200 for employees.