Common personal tax deduction questions
By now, you’ve resigned yourself to gathering your tax information for filing in time for the April 30th deadline. This is the time that people start to ask about various potential tax deductions, so I figured I would provide some answers to some common questions…
1) Home Office – Employees may deduct work-space-in-home expenses if their contract of employment requires them to pay the expenses, and the expenses are not reimbursable by the employer. Canada Revenue Agency (CRA) form T2200, Declaration of Conditions of Employment, should be completed by the employee and employer in order to claim these expenses. These expenses are entered as a deduction from income on line 229 of the personal income tax return.
In order for any expenses to be deductible, the work space must be either the place where the individual mainly does their work, or used exclusively for earning employment income, and used on a regular and continuous basis for meeting customers or other persons in the course of performing the job.
Allowed expenses include heat, electricity, light bulbs, cleaning materials, maintenance, etc. If the home is rented, a reasonable portion of the rent may be deducted. Mortgage interest and capital cost allowance may not be deducted.
Sales commission employees eligible to deduct work-space-in-home expenses may also deduct a reasonable portion of property taxes and home insurance.
2) Vehicle – Vehicle expenses may be deducted if the employee was normally required to carry on the duties of employment away from the employer’s place of business and was required under the contract of employment to pay motor vehicle expenses and did not receive any allowance or reimbursement from the employer for motor vehicle expenses.
Form T2200, Declaration of Conditions of Employment, must be completed in order to claim these expenses.
3) Clothing – The cost of special clothing or footwear required for your job is not deductible.
4) Clergy – certain clergy residence rent and utility costs can be deducted, but you must truly meet the CRA definition of “clergy.” See the CRA interpretation bulletin IT-141R Clergy residence deduction, and CRA web page Line 231 Clergy residence deduction.
5) Dues and annual professional membership dues paid to maintain a professional status recognized by statute are deductible.
I will be happy to discuss these issues and any othersin greater detail. I can be reached at email@example.com or at 416 222 5555 ext 315.