Allowable Employment Expenses in Canada
A guide for employees claiming deductions on their T1 tax return.
The Essential First Step: Form T2200
CRITICAL: You generally cannot claim employment expenses unless your employer signs **Form T2200, Declaration of Conditions of Employment**. This form confirms you were required to pay for expenses as part of your job contract.
You do not submit the T2200 with your tax return, but you must keep it in case the Canada Revenue Agency (CRA) asks to see it.
Key Deductible Expense Categories
1. Home Office Expenses
Claimable if your home workspace is:
- The place where you **principally** perform your duties (more than 50% of the time); **OR**
- Used **exclusively** for earning your employment income, and used on a **regular and continuous** basis for meeting clients or other people in the course of your employment.
What to claim:
- Rent, utilities, maintenance, and minor repairs (pro-rated based on the size of your workspace).
- Home insurance and property taxes are only deductible for **commissioned employees**.
2. Motor Vehicle Expenses
Claimable if your employment contract requires you to use your own vehicle, and the T2200 confirms you were **not reimbursed** for the mileage.
Requirement:
You must keep a **detailed logbook** showing the total distance driven and the distance driven for employment purposes throughout the year.
What to claim: Fuel, oil, insurance, license and registration, repairs, maintenance, and Capital Cost Allowance (depreciation).
3. Supplies, Tools, and Other Costs
- **Office Supplies:** Stationery, stamps, pens, printer paper, toner, etc., used directly in your employment.
- **Tradespeople's Tools:** Certain eligible tradespeople can claim a deduction for the cost of new tools (up to a limit).
- **Travel and Lodging:** Expenses for meals, accommodations, and transportation (excluding your vehicle) if you were required to be away from the municipality where your employer is located.
- **Salaries/Wages:** Amounts paid to an assistant or substitute, provided you were required to hire one under your employment contract.
Important Reminders
- **No Double Dipping:** You cannot deduct an expense for which your employer reimbursed you (unless the reimbursement was included in your taxable income).
- **Only Paid Amounts:** You can only claim expenses you **actually paid**.
- **Form T777:** The final claimed amount is calculated and reported on **Form T777, Statement of Employment Expenses**, which you *do* file with your T1 return.
- **Reasonable Amounts:** All expenses must be reasonable under the circumstances.