Employment Expenses for Commission Employees
You can deduct certain expenses you paid to earn employment income. You can do this only if your employment contract required you to pay the expenses, and either you did not receive an allowance for them, or the allowance you received is included in your income.
You kept a copy of Form T2200, Declaration of Conditions of Employment, completed and signed by your employer
Note: Most employees cannot claim employment expenses. You cannot deduct the cost of travel to and from work, or other expenses, such as most tools and clothing.
To deduct the expenses you paid to earn commission income, you have to meet all the following conditions:
• Under your contract of employment, you had to pay for your expenses.
• You were normally required to work away from your employer's place of business.
• You were paid in whole or in part by commissions or similar amounts (based on the volume of sales made or the contracts negotiated).
• You did not receive a non-taxable allowance for traveling expenses. Generally, an allowance is non-taxable when it is based solely on a reasonable per-kilometre rate.
Types of expenses for Commission Employees:
Accounting and legal fees
You can deduct legal fees you paid in the year to collect or establish a right to collect any amount that, if received, you would include as employment income on your return. However, you have to reduce your claim by any amount awarded to you, or any reimbursement you received to cover your legal expenses.
Advertising and promotion
You can deduct expenses for advertising and promotion, including amounts you paid for business cards, promotional gifts, and advertisements.
You can deduct payments for bonding and liability insurance premiums.
Computers and Other Equipment
If you lease computers, cell phones, fax machines, and other equipment, you can deduct the part of the lease costs that reasonably relates to earning your commission income. You can also deduct the percentage of airtime expenses for a cell phone that reasonably relates to earning your commission income. However, you cannot deduct amounts you paid to connect or license the cell phone.
You can deduct the cost of entertaining clients (for example, food, beverages, tickets, and entrance fees to entertainment or sporting events). You can also deduct tips, cover charges, room rentals to provide entertainment, such as hospitality suites, and the cost of private boxes at sports facilities.
Food and beverages
You can deduct food and beverage expenses as long as your employer requires you to be away for at least 12 consecutive hours from the municipality and the metropolitan area (if there was one) of your employer's location where you normally reported for work.
Deduct annual license fees if you must have a license to perform your work. For example, real estate and insurance salespeople can deduct the cost of their annual licenses.
You can deduct lodging expenses if your work conditions require you to travel away from your employer's place of business and pay your own lodging expenses.
Medical underwriting fees
You can deduct expenses you paid for items such as X-rays and heart diagrams related to underwriting your customers' risks.
Allowable Motor Vehicle Expenses
The types of motor vehicle expenses you can deduct include fuel and oil; maintenance and repairs; insurance; license and registration fees; capital cost allowance, the eligible interest you paid on a loan used to buy the motor vehicle; and eligible leasing costs
You can deduct office rent you paid to earn your commission income. Do not confuse office rent with work-space-in-the-home expenses
You can deduct parking costs related to earning your commission income. Generally, you cannot deduct the cost of parking at your employer's office, such as monthly or daily parking fees. These are personal costs.
Salaries for an assistant
You can deduct the salary you paid to your substitute or assistant. Note: You may have to withhold income tax, Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) contributions, Employment Insurance (EI) and Provincial Parental Insurance Plan (PPIP) premiums from the salary you paid. Report, on a T4 slip, the salary and amounts you withheld. For more information, see Employers' Guide - Filing the T4 slip and Summary. As the employer, you can also deduct as an expense your share of the CPP or QPP contributions and the EI and PPIP premiums.
You can deduct the cost of supplies. Supplies are only those materials you use directly in your work, and for no other purpose. Supplies include items such as pens, pencils, paper clips, stationery, stamps, street maps, and directories. Supplies do not include items such as briefcases or calculators. You can deduct expenses you paid for telegrams and long-distance telephone calls that reasonably relate to the earning of commission income. However, you cannot deduct the monthly basic rate for your home telephone. You cannot deduct the cost of special clothing you wear or have to wear for your work. Generally, you cannot deduct the cost of any tools that are considered to be equipment. However, if you are a tradesperson (including an apprentice mechanic), you may be able to deduct the cost of eligible tools you bought to earn employment income as a tradesperson.
You can deduct the cost of a training course as an employment expense. The course has to maintain, upgrade, or update your existing skills or qualifications that relate to your employment. You cannot deduct the cost of a training course as an employment expense if the course is for personal reasons, the cost is unreasonable, or you receive a lasting benefit from the course. For example, you receive a lasting benefit when you take a course to get a credit towards a degree, diploma, professional qualification, or similar certificate. If you cannot deduct the cost of a training course as an employment expense, you can claim it as a tuition amount as long as you meet the conditions described in pamphlet P105, Students and Income Tax
You can deduct the full amount you paid for travel fare, such as your airline, bus, or train ticket, as long as you paid it solely to earn commission income.
You can deduct expenses you paid for the employment use of a work space in your home, as long as you meet one of the following conditions:
• The work space is where you mainly (more than 50% of the time) do your work;
• You use the workspace only to earn your employment income and on a regular and continuous basis for meeting clients or customers.
• You can deduct the part of your costs that relates to your work space, such as the cost of electricity, heating, maintenance, property taxes, and home insurance. However, you cannot deduct mortgage interest or capital cost allowance.