Koroll & Company Blog

While employees are not able to deduct the same number of expenses as self-employed individuals, there are some specific expenses that can be deducted from employment income to help reduce your tax liability.

The following expenses may be deducted from your employment income, if the eligibility requirements are met.

It is important to note that these amounts should include GST and HST paid on goods/services.

Working from Home

If you use a home office, you may be able to claim a portion of your rent, utility (electricity, heating, water) and maintenance expenses.

Unlike self-employed individuals, you are unable to deduct property tax, insurance, or mortgage interest.

To be eligible for a home office expense, you must use the space to complete a majority of your work or, it must be used exclusively for earning income.

It is also important to note that your home office expenses cannot exceed your employment income. If they do, however, they can be carried forward to the following year. You are also not allowed to claim any portion of home office expenses that are reimbursed by an employer.

Travelling

If you are required to carry on employment duties away from your employer’s place of business, are required to pay your own expenses, and receive no allowance for travel, then you may be able to claim costs associated with work related travel.

These expenses include:

• Meals – you can claim 50% of your meal expenses, which were incurred while you were required to spend more than 12 hours away from the city where your employer is located.
• Automobile Expenses – If you drive your own vehicle for work purposes, you can claim a portion of your annual expenses (based on km driven). These expenses include insurance, gas and other fluids, maintenance and repairs, car registration and permits. You can also deduct a portion of your leasing or loan costs (capital cost allowance and loan interest).
• Parking – you can deduct any parking costs incurred for the purpose of earning income away from your usual place of employment

Dues and Memberships

If you pay annual membership fees to a professional organization/association or a union, these expenses can be deducted from your employment income, so long as they have not been reimbursed.

Legal and Accounting Expenses

If for any reason you must incur legal fees to collect or establish a right to any amount which would be included in your employment income, you can deduct these fees from your taxable income.

Other Expenses

If, according to your employment contract, you are required to lease office space, purchase supplies used in your employment duties or pay the salary of an assistant or substitute, you can deduct these expenses from your employment income to further reduce your taxable income.

You cannot, however, claim the cost of tools considered equipment, the cost of a computer or the cost of special clothing. These expenses are offset by the Canada Employment Amount, which is a tax credit every employed Canadian receives when filing their tax return.