Expenses which can be claimed from Employment Income from your personal Tax Return

Often this question comes to our mind that “Can I claim my expenses from my employment income”? Many Salaried employees wish that they should also get their expenses deducted from their payroll income and could reduce the tax payment load.

The answer to above question is ‘YES’, that if you are an employee and your employer requires from you to incur employment expenses, then as a employee, you can deduct such expenses subject to certain conditions.

To explain in a simple manner, we can put the list of deduction of Expenses and categories of employees into the following manner:

Categories of Employment:

Under this category first and foremost point is to categorise employee based on the following 2 criteria.

• Salaried Employee with no commission income and
• An employee with commission income.

Here an ‘Employee with Commission Income’ means an employee who also earns commissions besides his / her payroll as well as those earning only commission income. A simple example of such employees are sales or marketing employees

It is very important to decide the above criteria, as Commission employees have some privileges as well as restrictions in deductibility of expenses, as compared to Salaried employees who are drawing only employment income.

Eligible Expenses which can be claimed as a deductible Expense:

Generally you can’t claim all the expenses you incurred to go to work, such as the cost of commuting to and from your work, or some special clothing etc. However, still you will be able to claim lot of other expenses which you have paid as per your employment conditions for example if your job requires you to travel for official work then you might be able to claim a reasonable amount of motor vehicle expenses.

CRA has a list of expenses which is also known as ‘eligible expenses’, which can be claimed as employment expenses for e.g. accounting and legal fees, meals, travel and lodging expenses, home office expenses, motor vehicle expenses etc.

ELIGIBLE EXPENSES FOR SALARIED EMPLOYEES AND COMMISSION EMPLOYEES

It is important to note that though the commission earning employees can claim some additional expenses however there is a limit / restriction on the total amount of expenses which can be claimed, is to the extent of the ‘commission income’ only. However, interest and capital cost allowance (CCA) on the vehicle may be claimed from the regular employment income.

If the ‘commission income’ is not sufficient to cover all the expenses, then in such a case the commission employee can claim the expenses as a ‘Salaried employee’ instead of Commission Employee.

HOW TO CLAIM EMPLOYMENT EXPENSES IN INCOME TAX RETURN – T1

• You can claim the employment expenses in your personal income tax return i.e. T1 by providing the complete information in Form T777 of your T1 Tax return. The total of eligible claimable expenses will be calculated at line no, 9368 of T777 form and the same will also come on line no. 22900 of your income tax return i.e. T1 Tax Return
• Keep records of all the expenses you are claiming in your tax return like bills, invoices, receipts etc.
• Signed ‘Declaration of conditions of Employment’ in Form T2200 from your employer

Disclaimer: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.