Employment Expenses T2200
Employment expenses T2200 can be claimed by eligible employees to reduce taxable income. These are costs directly related to earning income, such as home office expenses, vehicle expenses, or supplies required for work. To qualify, employees need a signed T2200 form from their employer. Proper documentation and receipts are necessary to support these claims, helping reduce overall tax liability.
Where you earn income from employment and are required by the terms of your employment to incur certain expenses, you might be able to claim a deduction in respect of these expenses on your tax return. Such expenses might include sales expenses for commission employees, travel expenses, motor vehicle expenses, professional or union dues, office rent (including home office expenses), assistant’s salary, and consumable supplies. In general, with the exception of depreciation (capital cost allowance) in respect of an automobile or aircraft, employees are not permitted to claim any deductions in respect of capital expenditures.
Your employer must certify the conditions of your employment on Form
T2200 Declaration of Conditions of Employment to verify your eligibility to claim employment expenses. The Canada Revenue Agency does not require you to file the form with your tax return; however you must retain it in case they wish to see it. You must use form T777 to report expenses on your tax return.
In addition to the restriction on capital expenditures, there are other specific restrictions and limits on the expenses you may deduct. Computers, cell phones, and other equipment – You can deduct the part of the airtime expenses for a cell phone that reasonably relates to earning your employment income. However, you cannot deduct amounts you paid to connect or license the cell phone or the cost of fees for
Internet service. If you buy or lease a cell phone, fax machine, computer, or other such equipment, you cannot deduct the cost. Also, you cannot deduct capital cost allowance or interest you paid on money borrowed to buy this equipment.
Work-space-in-the-home expenses
- The work space is where you mainly (more than 50% of the time) do your work.
- You use the work space only to earn your employment income. You also have to use it on a regular and continuous basis for meeting clients or customers.
Keep with your records a copy of
Form T2200, Declaration of Conditions of Employment, which has been completed and signed by your employer.
You can deduct the part of your costs that relates to your work space, such as the cost of electricity, heating, and maintenance. However, you
cannot deduct mortgage interest, property taxes, home insurance, or capital cost allowance.
To calculate the percentage of work-space-in-the-home expenses you can deduct, use a reasonable basis, such as the area of the work space divided by the total finished area (including hallways, bathrooms, kitchens, etc.) For maintenance costs, it may not be appropriate to use a percentage of these costs. For example, if the expenses you paid (such as cleaning materials or paint) were to maintain a part of the house that was not used as a work space, then you cannot deduct any part of them. Alternatively, if the expenses you paid were to maintain the work space
only, then you may be able to deduct all or most of them.
If your office space is in a rented house or apartment where you live, deduct the percentage of the rent as well as any maintenance costs you paid that relate to the work space.
The amount you can deduct for work-space-in-the-home expenses is limited to the amount of employment income remaining after all other employment expenses have been deducted. This means that you cannot use work space expenses to create or increase a loss from employment.
You can only deduct work space expenses from the income to which the expenses relate, and not from any other income.
If you cannot deduct all your work space expenses in the year, you can carry forward the expenses. You can deduct these expenses in the following year, as long as you are reporting income from the same employer. However, you cannot increase or create a loss from employment by carrying forward work space expenses.
Information is taken from Canada Revenue Agency
website
