Watts Advisors Accounting & Tax Blog

March 27, 2012 0 comments

Deductible Employment Expenses

There are a few instances where you are able to deduct expenses against employment income.  The content of this blog will just cover the most common expenses of standard employment arrangements.  There are specialized rules for commission employees and other unique circumstances as well as more specialized expenses that will not be addressed in this post.

T2200

Before you can make any employee expense deductions your employer will have to complete and sign Form T2200, Declaration of Conditions of Employment. This form does not have to be filed with your return but must be available if the Canada Revenue Agency (CRA) asks for it.

Automobile

You can deduct motor vehicle expenses if you meet all of the following criteria:

  • You were normally required to do work away from your employer’s normal place of business
  • You had to pay your own vehicle expenses
  • You did not receive a non-taxable allowance for vehicle expenses (generally non-taxable when based solely on a reasonable per-kilometer rate)
  • You have a copy of a Form T2200 signed by your employer

If you are eligible the following expenses may be deducted: gas, repairs and maintenance, insurance, licence and registration fees, capital cost allowance of the vehicle, eligible interest, and eligible leasing costs.

Home Office

You can deduct home office expenses if you meet all of the following criteria:

  • This is where you mainly do your work (generally more than 50%)
  • You use this space only to earn employment income.  You use this space on a regular and continuous basis for meeting clients or customers.
  • You have a copy of a Form T2200 signed by your employer

If you are eligible, a reasonable proportion of the following expenses may be deducted: electricity, heating, maintenance, property taxes, and home insurance.  Mortgage interest and capital cost allowance are specifically not allowed to be deducted.  The rules on home office deductions go into far more specifics, if you want any further information contact your Chartered Accountant.

There are also other circumstances where other employee expenses may be deductible relating to moving/relocation, traveling expenses, accounting and legal fees related to work, parking, supplies, salary expenses, and office rent, these areas are not that common and thus not covered in this blog.  There are also different rules for commission employees, transportation employees, forestry operations, employed artists and employed trades persons, the specifics in these situations are also not covered in this blog.  The rules for deducting employment expenses are much more detailed than what is included in this blog post, for complete rules, clarification, or opinion on the eligibility of specific expenses please contact your Chartered Accountant.

If you have any questions related to employment expenses and whether you are able to deduct them on your personal tax return, or if you want the peace of mind having a chartered accountant complete your personal tax return this year please contact us at steve@wattsca.ca , 604 510-0156, or visit our website at http://www.wattsca.ca for more information.

 

 

Disclaimer: The information in the blog is for general information only and is not intended to be a substitute for professional advice.  Each person’s situation is unique, and a designated professional accountant can assist you in using the information on this blog to your best advantage.  The author of this blog strives, but does not guarantee, to provide information which is current and accurate.  Due to the nature of the information, it should not be relied upon for decision making without talking to a designated professional accountant.  By obtaining information from this blog, you fully release Steve Watts, Chartered Accountant of any liability that may arise from using this information.


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