If your employer requires you to pay expenses related to earning your income, you may be able to claim those expenses on your personal income tax return.
There are several rules and requirements to understand – and you must keep detailed records of expenses – but a little effort could result in big tax savings.
Your employer must fill out and sign a T2200
The T2200 is a form completed and signed by your employer that provides details about the types of expenses you’re expected to cover, any reimbursements you received and if you’re required to travel. If you don’t have this form, you cannot claim employment expenses!
You don’t need to file the T2200 with your tax return, but you must have it available should Canada Revenue Agency (CRA) ask for it. (And they often do!)
Expenses you can claim as an employee
If you earn salary income, you may be able to claim vehicle expenses for travel from your employer’s place of business to other work sites; travelling costs (other than vehicle) such as food, beverage and lodging expenses, if you’re required to work away; office supplies, telecommunication costs, rent for office space; and wages for an assistant. You may also be able to claim a portion of some business use of home expenses such as heat, electricity, water and maintenance.
If you earn commission income, you may also be able to claim some legal and accounting costs, as well as advertising, licensing, equipment rental and training costs. In addition to the business use of home expenses noted above, you may be able to claim a portion of your insurance and property tax.
Expenses you can NOT claim as an employee
You can’t claim the cost of travelling to and from work – CRA is very particular about this one – and most clothing is considered a personal expense (unless you’re an employed performer). Also, tools are generally considered a personal expense (unless you’re an apprentice mechanic or a tradesperson). You cannot claim the costs of connecting or licensing a cell phone, the fees for internet service, nor the costs of buying or leasing cell phones, fax machines, computers and other equipment.
There are a lot of ‘ifs’ and ‘maybes’ when it comes to tax deductions for employment expenses – give us a call and we’ll help you navigate the details.