With hybrid and remote work now common, many Canadians receive some kind of work-from-home support from their employer, whether a stipend, a supply reimbursement or equipment. CRA treats these differently depending on how the payment is structured: a reimbursement of documented costs is tax-free, while a flat allowance is income. This page is one of the allowance guides in the directory of taxable employment benefits.
Core Rule
| Payment type | Taxable? |
|---|---|
| Employer reimburses specific, documented home office expenses | ❌ Not taxable |
| Employer pays a flat “WFH allowance” not tied to receipts | ✅ Taxable |
| Employer provides equipment (laptop, monitor: work use only) | ❌ Not taxable |
| Employer provides equipment employee uses personally | ✅ Personal use portion taxable |
| Employer pays home internet (employment-use portion) | ❌ Not taxable |
| Employer pays full home internet including personal use | ✅ Personal portion taxable |
What Employers Can Pay Tax-Free
| Employer payment | Tax-free? | Conditions |
|---|---|---|
| Specific internet bill reimbursement (receipt required) | ✅ Yes | Employment-use portion |
| Office supplies reimbursed with receipts | ✅ Yes | Work-related only |
| Ergonomic equipment (chair, desk) | ✅ Yes | If used primarily for work |
| Computer / monitor / phone | ✅ Yes | If used primarily for work |
| Flat monthly “WFH stipend” | ❌ Taxable | No specific expense tie |
| Reimbursement for personal home expenses (rent, mortgage) | ❌ Taxable | Not employment-related |
What Appears on Your T4
| Situation | T4 box 40 impact |
|---|---|
| Employer reimburses actual documented expenses | Nothing: not taxable |
| Employer pays flat monthly WFH allowance | ✅ Amount in box 40 |
| Employer pays for internet including personal use | ✅ Personal portion in box 40 |
| Employer provides work-use-only equipment | Nothing |
A taxable allowance in box 40 is added to your employment income and taxed like salary; the guide to what taxable benefits are explains how that works.
Taxable Allowance and Your Own Claim
| Scenario | Can you claim home office expenses? |
|---|---|
| Employer pays taxable WFH stipend AND you have unreimbursed expenses | ✅ Yes: claim actual expenses with T2200 |
| Employer pays tax-free reimbursement for all your costs | ❌ Nothing left to claim |
| Employer pays nothing for WFH costs | ✅ Yes: claim with T2200 if required to work from home |
The COVID-era $2/day flat rate is no longer available, so an employee claim now takes a signed T2200 from the employer and a calculation of actual eligible expenses on Form T777. The guide to the work-from-home tax deduction covers the eligible expenses, the employment-use percentage and how to file, and the T2200 form guide covers the employer’s part.
An employer that moves you to a new city for the job is covered by a different set of rules, explained in the guide to relocation assistance.