2013 Personal Income Tax Questionnaire – Employment Expenses
Today’s article relates to question #6 on the 2013 Personal Income Tax Questionnaire sent to clients.
ARE YOU CLAIMING EXPENSES RELATED TO EARNING EMPLOYMENT INCOME?
Guide T4044 looks at the issue of employers requiring employees to incur costs to earn employment income.
For those employees, the CRA requires you fill out Form T777 (Statement of Employment Expenses), detailing those costs, and submit it with a Form T2200 (Declaration of Conditions of Employment), signed by the employer confirming that incurring those costs were a condition of employment.
There is no financial consequence to your employer signing a Form T2200 and therefore, you should consider discussing the issue with your employer, as the tax savings can be significant.
The type of expenses that are deductible are:
In addition, it may be possible for you to receive a refund of the GST portion of those costs you’ve incurred by filing a Form GST370, Employee and Partner GST/HST Rebate Application. The form is not difficult to fill out and is based on the taxable portion of employment expenses claimed. It’s important to note that your employer MUST BE a GST/HST registrant.
Other more specialized types of employment involving employees incurring expenses personally are:
Motor vehicle expenses and Automobile allowances
Automobile allowances are an attempt by the employer to offset the costs an employee incurs as to business related motor vehicle expenses.
If the automobile allowance is a per km rate and tax free, the employee cannot deduct actual expenses UNLESS the rate is unreasonably low (see CRA per km rates). In such a case, the employee can choose to include the allowance in their employment income and deduct actual business related motor vehicle expenses.
This can result in significant tax savings depending on the allowance received and the age/type of the vehicle.
If you have any questions about anything, please feel free to email me at email@example.com or post a comment below.