This is the second of three templates I'm creating for individuals to use on their personal tax return. This template provides a tracking tool for employees who are eligible to claim employment expenses. Again, similar to my self-employed template, this file contains 'macros' which need to be enabled in Excel to use the button functionality. An option should appear when you open the file to enable the macros. If you don't wish to use them you can still use the spreadsheet, you'll just have to manually add rows to the tables.
Employment Expenses Template |
In order to be eligible to claim employment expenses, you must have a T2200 signed and completed by your employer. This form does not have to be sent in with your tax return. It must be kept on file in case the Canada Revenue Agency (CRA) asks to see it. This form describes the types of expenses you were responsible for as an employee and indicates if any of those expenses were reimbursed. If the T2200 states that you were not required to pay for a certain type of expense, you cannot deduct it on your tax return.
The CRA's guide to employment expenses provides an excellent guide to assist you in determining what types of expenses you can deduct. If you are thinking about claiming employee expenses I would highly suggest you read the guide or speak to a tax professional early on in the year so you know which types of records to keep.
If you earn commissions as an employee, you have two choices of how to claim expenses. Under the first method, you are eligible to claim many more expenses than a non-commissioned employee, such as a portion of property taxes & insurance as a home office expense. The downside to this method is that your total expenses are limited to the amount of commission income you have during the year. If you only have a small amount of commissions, it may be more beneficial for you to deduct expenses under the second method. Refer to Chapter 2 in the CRA's guide for the commissioned employee method.
The second method is the method which salaried employees deduct their employment expenses, as well as any commissioned employees who choose this method. For the most part, there isn't a limitation on the amount of expenses you can claim, but there are restrictions on the types of expenses you can claim. Compared to the rules for commissioned employees, some expenses are not deductible, whereas the requirements for deducting some expenses are more stringent. Refer to Chapter 3 in the guide for the salaried employee method.
When using the template, enter your expenses under the 'Expenses (Commission)' tab if you're a commissioned employee. At the end of the year, you and/or your tax preparer will determine the best method which to deduct your expenses. If you're not a commissioned employee, enter your expenses under the 'Expenses (Salary)' tab. Similar to my self-employed template, there are additional tabs if you wish to claim vehicle and/or home office expense, as well as a mileage tracking sheet. Similar to self-employed individuals, if you are claiming vehicle expenses you must keep track of ALL your expenses throughout the year, not just those related to employment. You must also keep a mileage log tracking your employment-related trips.
Note: Unless your principal place of employment is at home, driving to and from your office is NOT considered employment-related mileage. Most employees fall into this situation, so be careful you are not including this mileage in your log. An example of eligible mileage would be driving to a client's business for a meeting.
As an employee you may also be entitled to a GST/HST rebate. If your employer is registered for GST/HST and is not a financial institution, you will be eligible for a rebate on the GST/HST related to the employment expenses you have deducted. Most tax preparation software performs the rebate calculation automatically, however you must be careful if you have deducted different expenses with both GST and HST - this will affect the rebate. This rebate is a refundable credit - it is refunded to you in the year you deduct the employment expenses, regardless of whether you have tax owing. In the next year, you must include the amount of rebate you received as income. Yes, that means you are paying tax on this amount. The net effect is that you have gotten back the portion of the GST/HST related to your employment expenses, less tax at your personal tax rate.
The CRA's guide to employment expenses provides an excellent guide to assist you in determining what types of expenses you can deduct. If you are thinking about claiming employee expenses I would highly suggest you read the guide or speak to a tax professional early on in the year so you know which types of records to keep.
If you earn commissions as an employee, you have two choices of how to claim expenses. Under the first method, you are eligible to claim many more expenses than a non-commissioned employee, such as a portion of property taxes & insurance as a home office expense. The downside to this method is that your total expenses are limited to the amount of commission income you have during the year. If you only have a small amount of commissions, it may be more beneficial for you to deduct expenses under the second method. Refer to Chapter 2 in the CRA's guide for the commissioned employee method.
The second method is the method which salaried employees deduct their employment expenses, as well as any commissioned employees who choose this method. For the most part, there isn't a limitation on the amount of expenses you can claim, but there are restrictions on the types of expenses you can claim. Compared to the rules for commissioned employees, some expenses are not deductible, whereas the requirements for deducting some expenses are more stringent. Refer to Chapter 3 in the guide for the salaried employee method.
When using the template, enter your expenses under the 'Expenses (Commission)' tab if you're a commissioned employee. At the end of the year, you and/or your tax preparer will determine the best method which to deduct your expenses. If you're not a commissioned employee, enter your expenses under the 'Expenses (Salary)' tab. Similar to my self-employed template, there are additional tabs if you wish to claim vehicle and/or home office expense, as well as a mileage tracking sheet. Similar to self-employed individuals, if you are claiming vehicle expenses you must keep track of ALL your expenses throughout the year, not just those related to employment. You must also keep a mileage log tracking your employment-related trips.
Note: Unless your principal place of employment is at home, driving to and from your office is NOT considered employment-related mileage. Most employees fall into this situation, so be careful you are not including this mileage in your log. An example of eligible mileage would be driving to a client's business for a meeting.
As an employee you may also be entitled to a GST/HST rebate. If your employer is registered for GST/HST and is not a financial institution, you will be eligible for a rebate on the GST/HST related to the employment expenses you have deducted. Most tax preparation software performs the rebate calculation automatically, however you must be careful if you have deducted different expenses with both GST and HST - this will affect the rebate. This rebate is a refundable credit - it is refunded to you in the year you deduct the employment expenses, regardless of whether you have tax owing. In the next year, you must include the amount of rebate you received as income. Yes, that means you are paying tax on this amount. The net effect is that you have gotten back the portion of the GST/HST related to your employment expenses, less tax at your personal tax rate.
I've provided a very brief overview of employment expense deductions - I highly recommend checking out the CRA's guide for more information. If you have any questions, ask me in the comments or send me an email!
-Jacob
-Jacob