Why Employment Contracts Trump Working Habits for Home Office Deductions
A Royal Bank financial advisor purchased a condo six kilometers from his downtown Toronto office in 2016, then tried to claim $8,000 in travel and home office expenses for tax years 2017 and 2018. The Federal Court of Appeal upheld the CRA's rejection this spring, and the case is now textbook material for why employment contracts matter more than working habits.
The contractual requirement nobody reads
To deduct employment expenses in Canada, you need Form T2200 signed by your employer, but that form is not a shield. Behind it sits section 8(1) of the Income Tax Act, which demands that your contract of employment require you to pay the expense as a condition of your job. The word doing the work is "require." The taxpayer in this case had a signed T2200, but the court looked past the form and asked what the actual employment agreement said. It said nothing about working from home. The employer permitted it. That distinction cost $8,000.
The taxpayer argued he needed the home office because clients expected evening and weekend availability. The court's response: personal choice does not convert a personal expense into a business one. If the employer does not mandate the workspace, the law treats it as voluntary.
The commuting trap
The second half of the denial was automobile expenses. The taxpayer tracked his mileage and submitted a logbook showing trips between his condo and the RBC office. Those are commuting costs. Section 8(1)(h.1) allows deductions for travel in the course of employment, between client sites, between branch locations, between work sites on the same day. It does not allow deductions for getting to your regular place of employment, even if you drive there five times a week.
At the Tax Court level, the judge noted that "travelling to one's regular place of employment is a personal expense." The taxpayer worked primarily from the RBC office. His home was a personal residence. The fact that he occasionally took calls or answered emails from the condo did not flip the address into a secondary work site under the Act.
The 50% threshold most hybrid workers miss
The Income Tax Act allows a home office deduction only if the workspace is where you principally perform your duties, meaning more than 50% of the time, for at least four consecutive weeks. The alternate path is that the space is used exclusively for work and for meeting clients on a regular and continuous basis. The taxpayer met neither test. He worked most days at the RBC branch. His condo had no dedicated office that was off-limits for personal use. And while he met clients, he met them at the branch or at coffee shops, not at home.
Even employees with signed T2200 forms fail this test if they split time between office and home without meeting the principally-performed or exclusive-use thresholds. The CRA has confirmed that the requirement to work from home need not be part of the employment contract itself; a verbal or written agreement is sufficient, and voluntary telework arrangements qualify. Employee preference can qualify if the employer certifies the arrangement on Form T2200.
What makes an expense deductible
An RBC branch manager who is contractually required to cover three Greater Toronto locations and drives 120 kilometers a day between Mississauga, Scarborough, and downtown can deduct mileage. A software developer whose contract states "remote work required, no office access provided" and who works from a dedicated room can deduct home office costs. Both have contracts that impose the expense. Neither is choosing convenience.
The taxpayer's contract imposed neither. He chose the condo. He chose to work from it part-time. The appeal was dismissed in April 2026, with costs. The taxpayer is now out the $8,000 in disallowed deductions, plus interest calculated from the original filing deadline, plus legal fees from two levels of court. The T2200 sat in the file the entire time.
A Royal Bank financial advisor purchased a condo six kilometers from his downtown Toronto office in 2016, then tried to claim $8,000 in travel and home office expenses for tax years 2017 and 2018. The Federal Court of Appeal upheld the CRA's rejection this spring, and the case is now textbook material for why employment contracts matter more than working habits.
The contractual requirement nobody reads
To deduct employment expenses in Canada, you need Form T2200 signed by your employer, but that form is not a shield. Behind it sits section 8(1) of the Income Tax Act, which demands that your contract of employment require you to pay the expense as a condition of your job. The word doing the work is "require." The taxpayer in this case had a signed T2200, but the court looked past the form and asked what the actual employment agreement said. It said nothing about working from home. The employer permitted it. That distinction cost $8,000.
The taxpayer argued he needed the home office because clients expected evening and weekend availability. The court's response: personal choice does not convert a personal expense into a business one. If the employer does not mandate the workspace, the law treats it as voluntary.
The commuting trap
The second half of the denial was automobile expenses. The taxpayer tracked his mileage and submitted a logbook showing trips between his condo and the RBC office. Those are commuting costs. Section 8(1)(h.1) allows deductions for travel in the course of employment, between client sites, between branch locations, between work sites on the same day. It does not allow deductions for getting to your regular place of employment, even if you drive there five times a week.
At the Tax Court level, the judge noted that "travelling to one's regular place of employment is a personal expense." The taxpayer worked primarily from the RBC office. His home was a personal residence. The fact that he occasionally took calls or answered emails from the condo did not flip the address into a secondary work site under the Act.
The 50% threshold most hybrid workers miss
The Income Tax Act allows a home office deduction only if the workspace is where you principally perform your duties, meaning more than 50% of the time, for at least four consecutive weeks. The alternate path is that the space is used exclusively for work and for meeting clients on a regular and continuous basis. The taxpayer met neither test. He worked most days at the RBC branch. His condo had no dedicated office that was off-limits for personal use. And while he met clients, he met them at the branch or at coffee shops, not at home.
Even employees with signed T2200 forms fail this test if they split time between office and home without meeting the principally-performed or exclusive-use thresholds. The CRA has confirmed that the requirement to work from home need not be part of the employment contract itself; a verbal or written agreement is sufficient, and voluntary telework arrangements qualify. Employee preference can qualify if the employer certifies the arrangement on Form T2200.
What makes an expense deductible
An RBC branch manager who is contractually required to cover three Greater Toronto locations and drives 120 kilometers a day between Mississauga, Scarborough, and downtown can deduct mileage. A software developer whose contract states "remote work required, no office access provided" and who works from a dedicated room can deduct home office costs. Both have contracts that impose the expense. Neither is choosing convenience.
The taxpayer's contract imposed neither. He chose the condo. He chose to work from it part-time. The appeal was dismissed in April 2026, with costs. The taxpayer is now out the $8,000 in disallowed deductions, plus interest calculated from the original filing deadline, plus legal fees from two levels of court. The T2200 sat in the file the entire time.
Sources
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