TaxTips.ca - Employment Expenses

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Personal Tax
Filing Your Return -> Employment expenses

What employment expenses are deductible?

Employee work-space-in-home expenses

Employee motor vehicle travel expenses

Employees meals and lodging expenses

Employee clothing and footwear

Employee tool deductions

Tools deduction for employed tradespersons

Tools deduction for eligible apprentice mechanic

Gain on disposal of employee tools

Other employment expenses

Income Tax Act s. 8

Some other expenses may be deducted from employment income. Examples are:

legal expenses incurred to collect or establish a right to amounts owed to the taxpayer that would be included in the taxpayer's employment income when received. See the Canada Revenue Agency (CRA) interpretation bulletin IT-99R5 Legal and Accounting Fees.

certain clergy residence rent (or fair rental value for a residence owned by the taxpayer, the taxpayer's spouse or common-law partner) and utility costs. See the CRA interpretation bulletin IT-141R Clergy residence deduction, and CRA web page Line 231 Clergy residence deduction.

dues and other expenses, including

annual professional membership dues paid to maintain a professional status recognized by statute. See CRA interpretation bulletin IT-158R2 Employees' professional membership dues.

office rent, or salary paid to an assistant or substitute, if the payment is required by the contract of employment

employer's CPP and EI premiums paid on the salary of an assistant or substitute

cost of supplies consumed directly in employment duties, if the payment of these costs is required by the contract of employment

annual union dues. See CRA web page Line 212 Annual union, professional or like dues.

employee's registered pension plan contributions. See CRA interpretation bulletin IT-167R6 Registered pension plans - employee's contributions.

employee's contributions to a retirement compensation arrangement. See CRA Guide T4041 Retirement compensation arrangements.

salary reimbursement, or disability payment reimbursement

forfeited amounts under a salary deferral arrangement

forfeited amounts under an employees profit sharing plan. See CRA interpretation bulletin IT-379R Employees profit sharing plans - allocations to beneficiaries.

Other employment expenses which may be deductible and are explained in the CRA guide T4044 Employment Expenses, include:

costs of power saws for employees working in forestry operations

sales expenses of commission employees (complete a TD1X form to have income tax deductions based on your net commission income after expenses)

Performing artists expenses:

musical instrument costs for taxpayer employed as a musician. This includes maintenance, rental, insurance, and capital cost allowance.

artists' employment expenses.

See CRA interpretation bulletin IT-525R Performing artists.

In order to claim many of the above deductions, CRA form T2200, Declaration of Conditions of Employment, should be completed by the employee and employer.

Form T777 Statement of Employment Expenses must be completed, and the deductions are claimed on line 229 of the tax return.

The above deduction amounts will include GST/HST and any provincial retail sales tax paid. You may be eligible for a refund of the GST/HST included in the costs. See Employee and Partner GST/HST rebate on the GST/HST page.

Revised: April 26, 2011

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