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Home TAX TIPS Our Tips Employment expenses

Employment expenses

Today’s employers shift more and more expenses on to employees – whether using computer at home, travelling to meetings with clients, using small supplies, or paying for promotional events. From journeymen, to financial advisors you may find yourself in a situation where your employer does not reimburse you for part or all expenses related to your work.

If this is the case then you may be eligible to claim those expenses as deduction on your income tax return. The first step is to discuss the situation with your employer and obtain the Declaration of Conditions of Employment (Form T2200). You must obtain this form signed by your employer before claiming deductions. Canada Revenue Agency often asks for it even if your return is filed electronically.

The following are some of the most common employment expenses:

  1. Automobile –you should record all your work related trips, including the number of kilometers driven, date, and purpose of the trip. At the end of the year you would total all the kilometers driven for work and divide them over the total kilometers driven in the year. This will become your employment related usage of the vehicle. Let’s say you came up with 50% of the work related use of your car. You will be then allowed to deduct 50% of the cost of gas, repairs and maintenance, insurance, interest on a car loan, lease, or amortization if the vehicle is owned.
  2. Home office – if you use your private residence as the main place to meet customers or perform your work on the regular basis, you can deduct some expenses related to your home. The square footage of the enclosed area serving as your home office should be divided over the total square footage of your home. If, for instance, your office occupies 10%, you will deduct 10% of your utility bills, maintenance and for commission employees also insurance and property tax.
  3. Meals and entertainment – if you are a commission employee and incur such expenses to gain business, then 50% of your business meals and entertainment events are tax deductible. You should keep track of who attended such events, including their telephone numbers.
  4. Office expenses – small office supplies used to perform your work can be claimed in full. Please note that you cannot deduct the cost of your own computer or its depreciation. You can only deduct lease payments if you decide to lease it. You can also claim air time on your cell phone, but not the actual cost of buying a cell phone.

If your employer reimbursed you for part of your expenses, you should only claim the portion of expenses that was not reimbursed. It is extremely important to keep all the records and receipts. Deducting employment expenses can save you a lot in taxes, so make sure you claim your allowable maximum.

 

Eva Kupiec, CMA

Beata Kurpiewski, CGA

Principals of Professional Accounting Office at 3461 Lakeshore Blvd. W.

www.beaccounting.ca