Employment expenses are claimed on line 229 of the T1 Individual Income Tax and Benefits Return. For a tax payer to have the option to deduct employment expenses, they must obtain a completed and signed T2200 Declaration of Conditions of Employment form from their employer. The employee does not have to file this form with his or her tax return, but must keep it in case the Canada Revenue Agency (CRA) requests to see this form.
The T2200 Declaration of Conditions of Employment form details the employer’s requirements for the tax payer to travel for employment purposes, pay for expenses related to employment, and details allowances (if any) received by the tax payer. This then enables tax payers to deduct certain expenses (including any GST/HST) paid to earn employment income. The deductibility of employment expenses will depend on the employment conditions set out in the T2200, and the type of employment income earned by the tax payer (salary vs. commission).
Employment expenses include but are not limited to the following:
- Accounting and legal fees;
- Advertising and promotion
- Food and beverages
- Entertainment expenses;
- Computers, and cell phones
- Motor vehicle expenses;
- Travelling expenses;
- Salary expenses;
- Office rent; and
- Work-space-in-the-home expenses.
Note that the cost of travel to and from work are not deductible.
It is advisable to seek professional advice to understand the tax laws that impact your particular situation, and to guide you through the complexities of Canadian Income taxes.
AWFS Consulting Inc. offers professional tax, business advisory, and accounting services to clients. The company’s mission is to offer financial leadership and support to clients in this ever-changing economic environment by empowering clients with financial knowledge.