Who can claim employment expenses? :CRA SOTW
by Doug Northrup
Having a job can be expensive. Besides commuting costs, other
incidentals such as dry cleaning, cellphone calls, office attire and
uniforms really add up.
And there is that inviting line for employment expenses on your tax
return, but only specific situations allow you to claim the costs of
having a job, and you need the paperwork to back up your claim.
For people with employment income, the good news is you can claim the
Canada Employment Amount, which works out to be about $150 in tax
savings, and all you need for that is a T4. This credit is meant to
offset some of the costs of having a job.
And if you think you might challenge the Canada Revenue Agency (CRA)
on claiming employment expenses, it has been tried. A serviceman was
required to get a haircut every two weeks as per his employee manual.
He tried to claim it as an employment expense, but the tax court
disagreed. As a rule, even if required by an employer, such expenses
aren't allowable.
The Income Tax Act is very specific about deductions you can claim if
you have employment income. Some are reported on a T4 slip, such as
union or professional dues, Registered Pension Plan contributions,
stock option deductions, CPP contributions and EI premiums.
Any other expenses you want to claim require your employer to
complete
Form T2200, the Declaration of Conditions of Employment. It's not a
very creative title but it's to the point, like most tax forms.
You need the T2200 to claim items like travel expenses, mileage or
other auto costs, office rent, office supplies and home-office space.
Though this form is available online, you can't complete the T2200
yourself. It must be issued by your employer.
You must be required to pay your own expenses as part of your
employment contract and itemize and claim the expenses on a T777
Form.
I can't stress enough that trying to reconstruct your expenses from
memory in February or March when you sit down to do your taxes isn't
going to work.
First, your memory is probably not that good, and second, your
appointment calendar may not have all the details you need.
The CRA requires you to keep detailed records of expenses. Just
estimating your meals or mileage may seem easier when you realize
that
your log book is incomplete, but it won't be enough if your return is
reviewed.
The only exception is workers defined as Transport Employees by
Revenue Canada. They can use a simplified method for claiming their
meals, but they still need to track their trips. I will be talking
about that in my next article.
Even though you don't submit your receipts with your tax return, the
CRA may ask for further documentation. If you can't supply the
receipt, you can't make the claim.
Your receipts need to include the date of purchase, name and address
of supplier, taxpayer's name and address, and a full description of
the goods or services provided. Not surprisingly, scraps of paper
with
a few scribbles on them aren't accepted by the CRA.
Some occupations are entitled to special deductions. For example,
commission salespeople can claim sales expenses and clergy can claim
accommodation costs.
Forestry workers, transportation workers, musicians, artists,
tradespeople and apprentice mechanics also have special deductions.
Taxpayers with business income or who are self-employed are usually
allowed to claim reasonable business expenses incurred to earn your
income. This is recorded on a T2125 Form and is part of a personal
tax
return.
And if you think your employer should be supplying you with a T2200
for your employment expenses, you should ask your payroll or human
resources contacts for more information. They can help determine
whether you qualify to make the claim.
Tax Talk is a weekly column prepared by Doug Northrup, a tax
professional, small business and corporate specialist and tax
advisory
member for H&R Block in Moncton. He can be reached by email at
john.north...@hrblock.ca.
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