Employment expenses

Why most employees cannot claim them

An employee’s deduction is narrow by design. The CRA treats travel to and from work, most tools and most clothing as personal costs. To claim, your employment contract has to require you to pay the expense, and you cannot have received an allowance for it unless that allowance is included in your income.

Which costs may qualify depends on the kind of employee you are. Salaried employees and commission employees have different lists, and commission employees face an overall limit tied to the commissions they received.

Form T2200 and Form T777

For most claims your employer completes Form T2200, Declaration of Conditions of Employment, and you keep a copy with your records. You then list the costs on Form T777, Statement of Employment Expenses, and enter the total on line 22900.

Examples that may qualify, if the conditions are met, include motor vehicle costs, travelling costs away from your employer’s place of business, parking tied to that work travel (not parking at your regular workplace), supplies used directly in your work, and an assistant’s salary. Eligible home office costs are one category; see our guide on working from home for the T2200 and T777 steps. Food and beverages while travelling are generally limited to 50 percent.

An illustrative example

Illustrative example: a salaried employee is required by contract to work at client sites and to pay their own vehicle costs, with no allowance. They might have a T2200 signed, track kilometres for work and total kilometres, and claim the work share of fuel and insurance on Form T777. A colleague who drives to the same office every day cannot claim that commute at all.

What to discuss with your accountant

Ask your accountant whether your contract really requires the expense, whether an allowance or reimbursement changes the claim, and whether a GST/HST rebate for employees is available on what you paid. Keep a daily record of expenses, receipts that show the seller, date and description, and any vehicle log.

Do not send receipts with your return. Keep them for at least six years from the end of the tax year, because the CRA may reduce a claim that is not supported.