TAX PLANNING FROM THE KNOWLEDGE BUREAU
By Evelyn Jacks
Employees who earn their living negotiating contracts for their employers
or selling on commission may claim certain itemized sales expenses. In all
cases, however, receipt-keeping is key; as is the availability of
employer-signed Form T2200-Declaration of Conditions of Employment
in case of audit.
A good place to start in gathering receipts is to download a copy of Form T777-Statement of Employment Expenses. There you will see
that employees who are required to incur out-of-pocket expenses as a
condition of their employment can write off expenses like accounting fees,
which includes income tax preparation costs and legal fees incurred to
defend charges incurred in the normal course of business.
Also included in the deductible expenses are auto and travel costs,
although these are subject to special rules. They are allowed only if
salespeople are required to pay their own expenses, without reimbursement
and without receiving a non-taxable allowance for the costs of travel. In
addition, the employee must regularly perform their duties away from their
employer’s place of business
For commissioned salespeople, allowable expenses are categorized into two
groups: deductible travel expenses (which can be claimed over and above
commissions earned) and deductible sales expenses, which includes
promotion, 50% of entertainment costs and home office costs in certain
cases. However, this latter category is limited to the amount of
Explained another way, the expenses categories are separated because it is
not possible to claim sales expenses that exceed commissions earned in the
year, except for the costs of interest and capital cost allowances on an
It’s also important to understand that the definition of an automobile, for
capital cost allowance (CCA) purposes, breaks down into two categories:
passenger vehicles (Class 10.1), which may have restrictions on the amount
of CCA, interest and leasing costs claimable and motor vehicles (Class 10),
which do not.
Now, as employees await all their T-slip information, is a good time to get
employers to verify in writing on Form T2200 that expense
reimbursement was not given and that the out-of-pocket payments were
required as a condition of employment.
is the founder and President of Knowledge Bureau. This
originally appeared in the
Knowledge Bureau Report, © 2017 The Knowledge Bureau, Inc. Reprinted with permission. All
rights reserved. Follow Evelyn Jacks on Twitter
@EvelynJacks. Visit her blog at www.evelynjacks.com.
Her latest book,
Family Tax Essentials, is now available.
Notes and Disclaimer
© 2017 by Fund Library. All rights reserved.
The foregoing is for general information purposes only and is the opinion
of the writer. No guarantee of investment performance is made or implied.
It is not intended to provide specific personalized advice including,
without limitation, investment, financial, legal, accounting or tax advice.