Employment Expenses 2023 - Canada.ca (2024)

Table of Contents
Table of contents Before you start Find out if this guide for you Forms included in this guide New for 2023 Deduction for tools for tradespeople and apprentice mechanics Employer declaration Temporary flat rate method Chapter 1 – Keeping records Employees who are shareholders Chapter2 – Employees earning commission income Note Example Employment conditions Deductible expenses Chapter3 – Employees earning a salary Note Deductible expenses Chapter4 – Transportation employees Note Employees of a transport business Railway employees Other transport employees How to claim your expenses Log book using the simplified method Log book using the detailed method Chapter5 – Employees working in forestry operations Chapter6 – Employed artists Part1 – Artists' employment expenses Part2 – Musical instrument expenses Chapter7 – Employed tradespersons Deduction for tools Employed apprentice mechanics Disposition of tools Labour Mobility Deduction (for eligible tradespeople) Chapter 8 – Employees working at home Who is eligible? What can you claim? Calculating your work‑space-in‑the‑home expenses Chapter9 – Motor vehicle expenses Keeping records Deductible expenses What kind of vehicle do you own? Zero-emission passenger vehicle (ZEPV) Joint ownership Employment use of a motor vehicle Interest expense Leasing costs Chapter 10 – Capital cost allowance (depreciation) Definitions Can you claim CCA? Classes of depreciable properties Zero-Emission Vehicles How to calculate capital cost allowance Chapter11 – Employee goods and services tax/harmonized sales tax (GST/HST) rebate How a rebate affects your income tax Do you qualify for the rebate? Expenses that qualify for the rebate Filing deadline Rebate restriction Overpayment of a rebate How to complete Form GST370, Employee and Partner GST/HST Rebate Application Quebec sales tax rebate Example References Forms Guides Information circulars Archived Interpretation bulletin Consolidated and archived Interpretation bulletins Income Tax Folio For more information If you need help Forms and publications Digital services for individuals Tax Information Phone Service (TIPS) Teletypewriter (TTY) users Formal disputes (objections and appeals) CRA service feedback program Reprisal complaints Page details FAQs References

T4044(E) Rev. 23

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Table of contents

  • Before you start
    • Find out if this guide is for you
    • Forms included in this guide
  • Chapter1 – Keeping records
    • Employees who are shareholders
  • Chapter2 – Employees earning commission income
    • Employment conditions
    • Deductible expenses
      • Accounting and legal fees
      • Advertising and promotion
      • Allowable motor vehicle expenses (including capital cost allowance)
      • Food, beverages, and entertainment expenses
      • Lodging
      • Parkingcosts
      • Supplies
      • Other expenses
      • Work-space-in-the-home expenses
  • Chapter3 – Employees earning a salary
    • Deductible expenses
      • Accounting and legal fees
      • Allowable motor vehicle expenses (including capital cost allowance)
      • Travelling expenses
      • Parkingcosts
      • Supplies
      • Other expenses
      • Work-space-in-the-home expenses
  • Chapter4 – Transportation employees
    • Employees of a transport business
    • Railway employees
    • Other transport employees
    • How to claim your expenses
      • Meals
      • Lodging and showers
      • Trips to the United States
  • Chapter5 – Employees working in forestry operations
  • Chapter6 – Employed artists
    • Part 1 – Artists' employment expenses
    • Part 2 – Musical instrument expenses
      • Deductible expenses
      • How to calculate your employment expenses
      • Capital cost allowance
      • Change in use
  • Chapter7 – Employed tradespersons
    • Deduction for tools
    • Employed apprentice mechanics
      • Deduction for tools for an eligible apprenticemechanic
    • Disposition of tools
    • Labour Mobility Deduction (for eligible tradespeople)
      • Eligible tradesperson
      • Eligible Temporary Relocation
      • Eligible temporary relocation expenses
  • Chapter 8– Employees working at home
    • Who is eligible?
    • What can you claim?
    • Calculating your work‑space-in‑the‑home expenses
  • Chapter9 – Motor vehicle expenses
    • Keeping records
    • Deductible expenses
    • What kind of vehicle do you own?
      • Motor vehicle
      • Passenger vehicle
      • Zero-emission passenger vehicle (ZEPV)
    • Joint ownership
    • Employment use of a motor vehicle
    • Interest expense
    • Leasing costs
      • Repayments and imputed interest
      • Eligible leasing costs for passenger vehicles leased after December 31, 2000
  • Chapter10 – Capital cost allowance (depreciation)
    • Definitions
    • Can you claim CCA?
    • Classes of depreciable properties
      • Class 8
      • Class 10
      • Class 10.1
    • Zero-Emission Vehicles
      • Class 54
      • Class 55
    • How to calculate capital cost allowance
      • Part A – Classes 8, 10, 54 and 55 property
      • Part B – Class 10.1 property
  • Chapter11 – Employee goods and services tax/harmonized sales tax (GST/HST) rebate
    • How a rebate affects your income tax
    • Do you qualify for the rebate?
    • Expenses that qualify for the rebate
      • Non-eligible expenses
      • Capital cost allowance (CCA)
    • Filing deadline
    • Rebate restriction
    • Overpayment of a rebate
    • How to complete FormGST370, Employee and Partner GST/HST Rebate Application
      • PartA – Identification
      • PartB – Rebate calculation
      • PartC – Declaration by claimant's employer
      • PartD – Certification
      • After completing your rebate application
    • Quebec sales tax rebate
  • Example
  • References
  • For more information

Before you start

Find out if this guide for you

If you are an employee and your employer requires you to pay expenses to earn your employment income, you can use this guide. It will help you calculate the expenses you can deduct. It also gives you all the information you need to claim the employee goods and services tax/harmonized sales tax (GST/HST) rebate. For more details, see Chapter11.

Note

You cannot deduct the cost of travel to and from work, or other expenses, such as most tools and clothing. These expenses are personal.

You deduct most of your allowable employment expenses on line22900 of your income tax and benefit return. To find out how to get a tax package online, or to request a printed copy, go to CRA forms and publications.

If you are self-employed, and you would like more information, readGuideT4002, Self-employed Business, Professional, Commission, Farming, and Fishing Income.

Forms included in this guide

FormT777, Statement of Employment Expenses
Use FormT777 to calculate your allowable employment expenses. Include FormT777 with your income tax and benefit return.

FormT2200, Declaration of Conditions of Employment
If you are deducting employment expenses, your employer will have to completeFormT2200. If you have more than one employer, ask each employer to complete a separate form. You do not have to include this form with your income tax and benefit return, but keep it in casethe CRA asks to see it.

FormTL2, Claim for Meals and Lodging Expenses
FormTL2is used by transport employees, such as employees of airline, railway, bus, or trucking companies, as well as other transport employees who satisfy the conditions listed in the section calledTravelling expensesinChapter3. Your employer has to complete Part 3 of the form. Most transport employees will completeFormTL2. You do not have to include this form with yourincome tax and benefit return, but keep it in casethe CRA asks to see it. For more information on how to complete this form, read Chapter 4.

FormGST370, Employee and Partner GST/HST Rebate Application
If you are an employee of a GST/HST registrant and you are deducting expenses from your employment income on your income tax and benefit return, you may be able to claim a rebate of the GST/HST you paid on these expenses. To claim the rebate, you must complete FormGST370. Include FormGST370 with your return. For information on how to complete this form, readHow to complete FormGST370, Employee and Partner GST/HST Rebate Application.

New for 2023

Deduction for tools for tradespeople and apprentice mechanics

For 2023 and later years, the maximum employment deduction for tradespeople’s tools has increased from $500 to $1,000, as described in Chapter 7.

As a result of this change, eligible tool costs under the apprentice mechanics' tools deduction would be those that are more than the greater of:

  • the combined amount of the increased deduction for tradespeople’s tool expenses ($1,000) and the Canada employment amount ($1,368 in 2023)
  • 5% of the taxpayer’s income earned as an apprentice mechanic (including from apprenticeship grants)

Employer declaration

For 2023 and later years, employers are not required to provide a handwritten signature on Form T2200, Declaration of Conditions of Employment, and T1223, Clergy Residence Deduction.The CRA will also accept an electronic signature on each of these forms.

Temporary flat rate method

The temporary flat rate method does not apply to 2023. Therefore, taxpayers looking to claim home office expenses for 2023 will be required to use the detailed method and get a completed Form T2200, Declaration of Conditions of Employment, from their employer.

Chapter 1 – Keeping records

You have to keep records for each year you claim expenses. These records must include all of the following:

  • a daily record of your expenses, together with your receipts and any cancelled cheques
  • any ticket stubs for travel
  • invoices
  • any monthly credit card statements
  • a record of each motor vehicle you used for employment. This record must show both the total kilometres you drove and the kilometres you drove for employment purposes in the year

Your receipts for the purchase of merchandise or services have to show the following:

  • the date you made the purchase
  • the name and address of the seller or supplier
  • your name and address
  • a full description of the goods or services you bought
  • information regarding the GST/HST you paid on your expenses, or the rate of tax if you are claiming the GST/HST rebate for employees

Keep a record of the motor vehicles or musical instruments you bought and sold because you may be able to claim capital cost allowance. This record has to show who sold you the motor vehicle or musical instrument, the cost, and the date you bought it.

If you sell or trade a motor vehicle or musical instrument, show the date you sold or traded it on your bill of sale. Also, show the amount you received from the sale or trade-in.

Do not send your records or receipts with your income tax and benefit return, but keep them in casethe CRAasks to see them. If you do not keep the necessary information,the CRAmay reduce your claim.

Generally, you have to keep your records (whether paper or electronic) for at leastsix years from the end of the tax year to which they apply. If you want to destroy your records before the six-year period is over, you must first get written permission from the director of your tax services office. To do this, either use FormT137, Request for Destruction of Records, or make your own written request.

For more information, see Information Circular IC78-10R5, Books and Records Retention/Destruction. You can find the address of your tax services officeby going toFind a CRA addressor by callingthe CRAat 1-800-959-8281.

Employees who are shareholders

When you are an employee and also a shareholder of a business, there are two conditions that must be satisfied before employment expenses can be claimed. They are:

  • The expenses were incurred as part of your employment duties
  • You were required to pay for the expenses yourself as part of your employment duties

When an employee is also a shareholder, these two conditions can be satisfied in the following way:

  • The expenses were incurred as part of your employment duties and not in your capacity as a shareholder

    If you are a shareholder, you must establish that the expenses were incurred in your capacity as an employee and not a shareholder. To do this, you must be able to establish that the expenses are comparable to expenses incurred by employees (who are not shareholders or related to a shareholder) with similar duties at your company, or at other businesses similar to your company in size, industry and services provided. You do not need to include this information on your income tax and benefit return or the Form T2200, Declaration of Conditions of Employment.However, the CRA could ask you to provide this later.

  • You were required to pay for the expenses yourself as part of your employment duties

    Usually, a written contract of employment specifies the expenses a non-shareholder employee must pay. Sometimes there is no written contract or the requirement to incur expenses is not clearly identified in the contract, but there is an implied requirement for the employee to pay the expenses. For example, an employee can demonstrate an implied requirement by showing they face possible disciplinary action if they do not meet the requirement.

    If you are a shareholder-employee however, an implied requirement may be more difficult to demonstrate and a written contract may not be adequate to establish that you were required to pay for the expenses as part of your employment duties.

    To meet this condition, you must be able to establish that the expenses are comparable to expenses incurred by employees (who are not shareholders or related to a shareholder) with similar duties at your company, or at other businesses similar to your company in size, industry and services provided. This will support that you were required to pay the expenses to fulfill your obligations in your capacity as an employee.

You must meet both conditions to deduct the expense(s) on the income tax and benefit return. If both conditions are met, you may, as a shareholder, have the authority to certify Form T2200for yourself or a related employee.

Chapter2 – Employees earning commission income

This chapter describes the expenses you can deduct if you earn commission income. If you earn a salary, readChapter3.

Note

You cannot deduct the cost of travel to and from work, or other expenses, such as most tools and clothing.

Employees who sell goods or negotiate contracts for an employer can deduct some of the amounts they paid to earn commission income.

However, except for interest and capital cost allowance (CCA) on your vehicle, the total of the expenses you can deduct cannot be more than the commissions or similar amounts you received in the year.

If your total commission expenses (except interest and CCA on your vehicle) are more than the commissions or similar amounts you received, there is another method you can use to claim expenses. Using this method might be to your advantage because it allows you to claim your expenses as a salaried employee instead of as a commission employee. If you deduct expenses this way, your claim is not limited to the commissions you received in the year. If you choose this method, you would claim only travelling expenses (food and lodging), motor vehicle expenses (including interest and CCA on your vehicle), and certain other expenses if applicable, such as the cost of supplies or office rent. However, to do so, you have to meet the same conditions that a salaried employee must meet for claiming travelling expenses and motor vehicle expenses. For more information, readTravelling expenses.

Example

Andrew works for a company that sells video equipment and meets the employment conditions. During2023, he recorded the following information:

Salary received

$ 45,000

Commissions received

$ 5,000

Total employment income

$ 50,000

Expenses:

Advertising and promotion

$ 1,000

Travelling expenses

$ 6,000

Capital cost allowance

$ 1,500

Interest on car loan

$ 500

Total expenses

$ 9,000

Andrew's total expenses of $9,000 are more than his commissions of $5,000. Therefore, his claim for expenses is limited to $5,000 plus the CCA of $1,500 and interest of $500, for a total claim of $7,000. However, he could choose to claim expenses as a salaried employee, in which case he could claim the travelling expenses of $6,000, but not the advertising and promotion expenses. Using this method, Andrew also claims the CCA of $1,500 and interest of $500, for a total claim of $8,000.

Employment conditions

To deduct the expenses you paid to earn commission income, you have to meet all of the following conditions:

  1. Under your contract of employment, you had to pay your own expenses
    Note
    You are not considered to have paid your own motor vehicle expenses if your employer reimburses you or you refuse a reimbursement or reasonable allowance from your employer.
  2. You were normally required to work away from your employer's place of business
  3. You were paid in whole or in part by commissions or similar amounts. These payments were based on the volume of sales made or the contracts negotiated
  4. You did not receive a non-taxable allowance for travelling expenses. Generally, an allowance is non-taxable as long as it is a reasonable amount. For example, an allowance for the use of a motor vehicle is usually non-taxable when it is based solely on a reasonable per-kilometre rate
  5. You keep with your records a copy of FormT2200, Declaration of Conditions of Employment, which has been completed and signed by your employer

For more information, see Interpretation BulletinIT-522R Archived – Vehicle, Travel and Sales Expenses of Employees.

Deductible expenses

This guide includes FormT777, Statement of Employment Expenses. Use it to calculate your total employment expenses. Once you calculate the employment expenses you can deduct, enter the amount on line22900 of your income tax and benefit return. Include FormT777 with your return.

Your employment expenses include any GST and provincial sales tax (PST), or HST, you paid on these expenses. You may be able to get a rebate of the GST/HST you paid.For more information, readChapter11.

The following describes the types of deductible expenses in the order they appear on FormT777.

Accounting and legal fees

You can deduct reasonable accounting fees you paid for help to complete and file your income tax and benefit return. You can deduct legal fees you paid in the year to collect or establish a right to collect salary or wages.

You can also deduct legal fees you paid in the year to collect or establish a right to collect other amounts that must be reported in employment income even if they are not directly paid by your employer.

However, you must reduce your claim by any amount awarded to you for those fees or any reimbursement you received for your legal expenses. You do not have to meet the conditions listed in Employment conditions to deduct legal fees.

For more information, see consolidated and archived Interpretation BulletinIT-99R5 Consolid Archived – Legal and Accounting Fees.

Advertising and promotion

You can deduct expenses for advertising and promotion, including amounts you paid for business cards, promotional gifts, and advertisements.

Allowable motor vehicle expenses (including capital cost allowance)

Motor vehicle expenses areexplainedin Chapter 9and capital cost allowance in Chapter 10.

If you have received a non-taxable motor vehicle allowance and can show that the employment-related motor vehicle expenses are in excess of the allowance and voluntarily include the amount of the allowance in income, you can deduct your motor vehicle expenses if employment conditions 1, 2, 3, and 5 are met.

Food, beverages, and entertainment expenses

Food and beverages - You can deduct food and beverage expenses as long as your employer requires you to be away for at least 12 consecutive hours. To qualify, you must be away from the municipality and the metropolitan area (if there is one) of your employer's location where you normally report for work. These amounts are subject to the 50% limit discussed below in the section called Entertainment expenses.

The 50% limit also applies to the cost of food, beverages, and entertainment you paid for when you travelled on an airplane, train, or bus, as long as the ticket price did not include such amounts.

For more information, readInterpretation BulletinIT-518R Archived -Food, Beverages and Entertainment Expenses.

Entertainment expenses - You can deduct part of the cost of entertaining clients. Expenses you can deduct include those for food, beverages, tickets, and entrance fees to entertainment or sporting events. You can also deduct tips, cover charges, room rentals to provide entertainment, such as hospitality suites, and the cost of private boxes at sports facilities.

The most you can deduct is 50% of the lesser of:

  • the amount you actually paid
  • an amount that is reasonable to pay in the circumstances

For more information, read Interpretation BulletinIT-518RArchived.

Lodging

You can deduct lodging expenses if your work conditions require you to travel away from your employer's place of business and you pay your own lodging expenses.

Parking costs

You can deduct parking costs related to earning your commission income. Generally, you cannot deduct the cost of parking at your employer's office, such as monthly or daily parking fees or the cost of traffic infractions such as speeding tickets. These are personal costs.

Do not include parking costs as part of your allowable motor vehicle expenses. Enter them on the "Parking" lineon FormT777.

Supplies

You can deduct the cost of supplies that you paid for, or that were paid for you and included in your income. Supplies are only those materials you use directly in your work, and for no other purpose.

Supplies include items such as stationery items, stamps, toner, ink cartridges, street maps, and directories. Supplies do not include items such as briefcases or calculators.

Special clothing and tools – You cannot deduct the cost of special clothing you wear or have to wear for your work. You cannot deduct the cost of any tools that are considered to be equipment. However, if you are a tradesperson (including an apprentice mechanic) as described in Chapter7, you may be able to deduct the cost of eligible tools you bought to earn employment income as a tradesperson.

For more information, see Interpretation Bulletin IT-352R2 Archived – Employee's Expenses, Including Work Space in Home Expenses.

Other expenses

Licences– Deduct annual licence fees if you must have a licence to do your work. For example, real estate and insurance salespeople can deduct the cost of their annual licences.

Bonding premiums – You can deduct payments for bonding and liability insurance premiums.

Medical underwriting fees – You can deduct expenses you paid for items such as X-rays and heart diagrams related to underwriting your customers' risks.

Computers, cell phones, and other equipment – If you lease computers, cell phones, fax machines, or other equipment, you can deduct the part of the lease cost that reasonably relates to earning your commission income.

Note

You can include your reasonable monthly home internet access fees as part of your work-space-in-the-home expenses.

You can also deduct the part of airtime expenses for a cell phone that reasonably relates to earning your commission income. However, you cannot deduct amounts you paid to connect or license the cell phone.

If you buy a computer, cell phone, fax machine, or other such equipment, you cannot deduct the cost. Also, you cannot deduct capital cost allowance or interest you paid on money you borrowed to buy this equipment.

Long distance calls You can deduct expenses you paid for long distance telephone calls that reasonably relate to the earning of commission income. However, you cannot deduct the monthly basic rate for your home telephone.

Salaries – You can deduct the salary you paid (or that was paid for you and included in your income) to your substitute or assistant.

You may have to withhold income tax, Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) contributions, and employment insurance (EI) and provincial parental insurance plan (PPIP) premiums from the salary you paid. Report on aT4slip, the salary and amounts you withheld. For more information, see Fill out the slips and summariesor GuideRC4120, Employers' Guide - Filing the T4 Slip and Summary.

As the employer, you can also deduct as an expense your share of the CPP or QPP contributions and the EI and PPIP premiums.

Office rent – You can deduct office rent you paid, or that was paid for you and included in your income, to earn your commission income. Do not confuse office rent with work-space-in-the-home expenses.

Training costs – You can deduct the cost of a training course as an employment expense. The course has to maintain, upgrade, or update your existing skills or qualifications that relate to your employment.

You cannot deduct the cost of a training course as an employment expense if the course is for personal reasons, the cost is unreasonable, or you receive a lasting benefit from the course. For example, you receive a lasting benefit when you take a course to get a credit towards a degree, diploma, professional qualification, or similar certificate.

For more information and additional examples, see Interpretation BulletinIT357R2 Archived – Expenses of training.

If you cannot deduct the cost of a training course as an employment expense, you can claim it as a tuition amount as long as you meet the conditions described in Guide P105, Students and Income Tax.

Travel fare – You can deduct the full amount you paid for travel fare, such as your airline, bus, or train ticket, as long as you paid it only to earn commission income.

Excess employees profit-sharing plan (EPSP) amounts – If an excess amount has been contributed to a specified employee's EPSP in 2023, the excess EPSP amount is subject to a special tax.

A specified employee is a person who deals with an employer in a non-arm's length relationship or who owns, directly or indirectly, at any time in the year, not less than 10% of the issued shares of any class of the capital stock of the employer corporation, or any other corporation that is related to the employer corporation.

Generally, an excess EPSP amount is the part of an employer's EPSP contribution, allocated by the trustee to a specified employee that is more than 20% of that employee's income from employment received in the year from that employer.

To calculate the excess EPSP amount and the special tax that applies to it, get Form RC359, Tax on Excess Employees Profit-Sharing Plan Amounts, by going to Forms and publications or by calling the CRA at 1-800-959-8281.

Work-space-in-the-home expenses

You can deduct expenses you paid in 2023 for the employment use of a work space in your home, as long as you meet one of the following conditions:

  • The work space is where you mainly (more than 50% of the time) do your work
  • You use the work space only to earn your employment income. You also have to use it on a regular and continuous basis for meeting clients, customers, or other people in the course of your employment duties

Keep with your records a copy of FormT2200, Declaration of Conditions of Employment, that has been completed and signed by your employer.

You can deduct the part of your costs that relates to your work space, such as the cost of electricity, heating, maintenance, property taxes, and home insurance. However, you cannot deduct mortgage interest or capital cost allowance.

Monthly home internet access fees – You can include your reasonable monthly home internet access fees as part of your work-space-in-the-home expenses.

To calculate the percentage of work-space-in-the-home expenses you can deduct, use a reasonable basis, such as the area of the work space divided by the total finished area (including hallways, bathrooms and kitchens). For maintenance costs, it may not be appropriate to use a percentage of these costs. For example, if the expenses you paid (such as cleaning materials or paint) were to maintain a part of the house that was not used as a work space, then you cannot deduct any part of them. Alternatively, if the expenses you paid were to maintain the work space only, then you may be able to deduct all or most of them.

If your office space is in a rented house or apartment where you live, deduct the percentage of the rent and any maintenance costs you paid that relate to the work space.

The amount you can deduct for work-space-in-the-home expenses is limited to the amount of employment income remaining after all other employment expenses have been deducted. This means that you cannot use work space expenses to create or increase a loss from employment.

You can only deduct work space expenses from the income to which the expenses relate, and not from any other income.

If you cannot deduct all your work space expenses in the year, you can carry forward the expenses. You can deduct these expenses in the following year as long as you are reporting income from the same employer. However, you cannot increase or create a loss from employment by carrying forward work space expenses.

For more information, readInterpretation BulletinIT-352R2 Archived – Employee's Expenses, Including Work Space in Home Expenses.

Chapter3 – Employees earning a salary

This chapter describes the expenses you can deduct if you earn a salary. If you earn commission income, readChapter2.

Note

You cannot deduct the cost of travel to and from work, or other expenses, such as most tools and clothing.

Deductible expenses

This guide includes FormT777, Statement of Employment Expenses. Use it to calculate your total employment expenses. Once you calculate the employment expenses you can deduct, enter the amount on line22900 of your income tax and benefit return. Include FormT777 with your return.

Your employment expenses include any GST and provincial sales tax (PST), or HST, you paid on these expenses. You may be able to get a rebate of the GST/HST you paid.For more information, readChapter11.

The following describes the types of deductible expenses in the order they appear on FormT777.

Accounting and legal fees

You can deduct any legal fees you paid in the year to collect or establish a right to collect salary or wages.

You can also deduct legal fees you paid in the year to collect or establish a right to collect other amounts that must be reported in employment income even if they are not directly paid by your employer. However, you must reduce your claim by any amount awarded to you for those fees or any reimbursement you received for your legal expenses.

In some cases, you may also be able to deduct certain accounting fees. For more information, read consolidated and archived InterpretationBulletinIT-99R5 Consolid Archived - Legal and Accounting Fees.

Allowable motor vehicle expenses (including capital cost allowance)

You can deduct your motor vehicle expenses if you meet all of the following conditions:

  1. You were normally required to work away from your employer's place of business or in different places
  2. Under your contract of employment, you had to pay your own motor vehicle expenses. You are not considered to have paid your own motor vehicle expenses if your employer reimburses you or you refuse a reimbursement or reasonable allowance from your employer
  3. You did not receive a non-taxable allowance for motor vehicle expenses. Generally, an allowance is non-taxable when it is based solely on a reasonable per-kilometre rate
  4. You keep with your records a copy of Form T2200, Declaration of Conditions of Employment, which has been completed and signed by your employer

If you received a non-taxable motor vehicle allowance, you can deduct your motor vehicle expenses if all of the following conditions are met:

  • You can show that the employment-related motor vehicle expenses are in excess of the allowance
  • You voluntarily include the amount of the allowance in income
  • Conditions 1, 2, and 4 above are met

For more information, readInterpretation BulletinIT-522R Archived – Vehicle, Travel and Sales Expenses of Employees.

Motor vehicle expenses are explained in Chapter 9and capital cost allowance in Chapter 10.

Travelling expenses

Travelling expenses include food, beverage, lodging and transportation (such as airplane, train or bus) expenses but not motor vehicle expenses. You can deduct travelling expenses as long as you meet all of the following conditions:

  • You were normally required to work away from your employer’s place of business or in different places
  • Under your contract of employment, you had to pay your own travelling expenses
  • You did not receive a non-taxable allowance for travelling expenses. Generally, an allowance is non-taxable as long as it is a reasonable amount
  • You keep with your records a copy of FormT2200, Declaration of Conditions of Employment, which has been completed and signed by your employer

Enter your claim for deductible transportation expenses (such as airplane, train or bus) on the “Other expenses” line of FormT777, Statement of Employment Expenses.

You can deduct food and beverage expenses if your employer requires you to be away for at least 12 consecutive hours from the municipality and the metropolitan area (if there is one) of your employer's location where you normally report for work. The most you can deduct for food and beverage expenses is 50% of the lesser of:

  • the amount you actually paid
  • an amount that is reasonable in the circumstances

The 50% limit also applies to the cost of food and beverages you paid for when you travelled on an airplane, train, or bus, as long as the ticket price did not include such amounts.

If you are a transportation employee you may also be able to claim expenses for meals and lodging (including showers). ReadChapter4.

For more information about travelling expenses, readInterpretation BulletinIT-522R Archived – Vehicle, Travel and Sales Expenses of Employees, and Interpretation BulletinIT-518R Archived – Food, Beverages and Entertainment Expenses.

Parking costs

You can deduct parking costs related to earning your employment income as long as you meet all the conditions listed in the section called Allowable motor vehicle expenses (including capital cost allowance). Generally however, you cannot deduct the cost of parking at your employer's office, such as monthly or daily parking fees or the cost of traffic infractions such as speeding tickets. These are all personal costs.

Do not include parking costs as part of your allowable motor vehicle expenses. Enter them on the "Parking" lineon FormT777.

Supplies

You can deduct the cost of supplies you paid for (or that were paid for you and included in your income) if you meet all of the following conditions:

  • Under your contract of employment, you had to provide and pay for the supplies
  • You used the supplies directly in your work
  • Your employer has not repaid and will not repay you for these expenses
  • You keep with your records a copy of FormT2200, Declaration of Conditions of Employment, which has been completed and signed by your employer

Supplies are only those materials you use directly in your work, and for no other purpose.

Supplies include items such as stationery items, stamps, toner, ink cartridges, street maps, directories, disposable masks, disposable gloves, and sanitizing liquid. Supplies do not include items such as briefcases or calculators.

Special clothing and tools – You cannot deduct the cost of special clothing you wear or have to wear for your work. Also, you cannot deduct the cost of any tools that are considered to be equipment. However, if you are a tradesperson (including an apprentice mechanic) as described in Chapter7, you may be able to deduct the cost of eligible tools you bought to earn employment income as a tradesperson.

For more information, readInterpretation BulletinIT-352R2 Archived – Employee's Expenses, Including Work Space in Home Expenses.

For a detailed list of eligible supplies, go to Home office expenses for employees.

Other expenses

Salaries – You can deduct the salary you paid (or that was paid for you and included in your income) to your substitute or assistant (extra help)if you meet all of the following conditions:

You may have to withhold income tax, Canada Pension Plan (CPP) or Quebec Pension Plan (QPP) contributions, employment insurance (EI), and provincial parental insurance plan (PPIP) premiums from the salary you paid. Report on a T4 slip, the salary and amounts you withheld. For more information, go to Fill out the slips and summaries, or readGuideRC4120, Employers' Guide – Filing the T4 Slip and Summary.

As the employer, you can also deduct as an expense your share of the CPP or QPP contributions and the EI and PPIP premiums.

Office rent – You can deduct office rent you paid (or that was paid for you and included in your income) if you paid it to earn your employment income. Also, you must meet all of the following conditions:

  • Under your contract of employment, you had to rent an office and pay the expenses
  • Your employer has not repaid and will not repay you for these expenses
  • You keep with your records a copy of FormT2200, Declaration of Conditions of Employment which has been completed and signed by your employer

Do not confuse office rent with work-space-in-the-home expenses, which is explained in the next section.

Long distance calls You can deduct expenses you paid for long-distance telephone calls, as long as you paid them to earn employment income. However, you cannot deduct the monthly basic rate for a telephone. You can claim a basic cell phone plan, but not a basic landline.

Computers, cell phones, and other equipment – You may also be able to deduct a portion of your basic cell phone service plan if all of the following conditions are met:

  • The cost of the plan is reasonable
  • You are able to prove the cellular minutes or data were consumed directly in the performance of your employment duties (as well as the cost of the minutes or data)
  • The cost of the plan has been divided between employment and personal use on a reasonable basis

However, you cannot deduct amounts you paid to connect or license the cell phone.

If you buy or lease a cell phone, fax machine, computer, or other such equipment, you cannot deduct the cost. Also, you cannot deduct capital cost allowance or interest you paid on money borrowed to buy this equipment.

Excess employees profit-sharing plan (EPSP) amounts – If an excess amount has been contributed to a specified employee's EPSP in 2023, the excess EPSP amount is subject to a special tax.

A specified employee is a person who deals with an employer in a non-arm's length relationship or who owns, directly or indirectly, at any time in the year, not less than 10% of the issued shares of any class of the capital stock of the employer corporation, or any other corporation that is related to the employer corporation.

Generally, an excess EPSP amount is the part of an employer's EPSP contribution, allocated by the trustee to a specified employee that is more than 20% of that employee's income from employment received in the year from that employer.

To calculate the excess EPSP amount and the special tax that applies to it, get Form RC359, Tax on Excess Employees Profit-Sharing Plan Amountsor call 1-800-959-8281.

Work-space-in-the-home expenses

You can deduct expenses you paid in 2023 for the employment use of a work space in your home, as long as you had to pay for them under your contract of employment. These expenses must be used directly in your work and your employer has not reimbursed and will not reimburse you. Also, you must meet one of the following conditions:

  • The work space is where you mainly (more than 50% of the time) do your work
  • You use the work space only to earn your employment income. You also have to use it on a regular and continuous basis for meeting clients, customers, or other people in the course of your employment duties

Keep with your records a copy of FormT2200, Declaration of Conditions of Employment, which has been completed and signed by your employer.

You can deduct the part of your costs that relates to your work space, such as the cost of electricity, heating, and maintenance. However, you cannot deduct mortgage interest, property taxes, home insurance, or capital cost allowance.

To calculate the percentage of work-space-in-the-home expenses you can deduct, use a reasonable basis, such as the area of the work space divided by the total finished area (including hallways, bathrooms and kitchens). For maintenance costs, it may not be appropriate to use a percentage of these costs. For example, if the expenses you paid (such as cleaning materials or paint) were to maintain a part of the house that was not used as a work space, then you cannot deduct any part of them. Alternatively, if the expenses you paid were to maintain the work space only, then you may be able to deduct all or most of them.

If your office space is in a rented house or apartment where you live, deduct the percentage of the rent as well as any maintenance costs you paid that relate to the work space.

The amount you can deduct for work-space-in-the-home expenses is limited to the amount of employment income remaining after all other employment expenses have been deducted. This means that you cannot use work space expenses to create or increase a loss from employment.

You can only deduct work space expenses from the income to which the expenses relate, and not from any other income.

If you cannot deduct all your work space expenses in the year, you can carry forward the expenses. You can deduct these expenses in the following year, as long as you are reporting income from the same employer. However, you cannot increase or create a loss from employment by carrying forward work space expenses.

For more information, see archived Interpretation BulletinIT-352R2 Archived – Employee's Expenses, Including Work Space in Home Expenses.

Monthly home internet access fees – You can include your reasonable monthly home internet access fees as part of your work-space-in-the-home expenses. You cannot claim the portion of fees related to the lease of a modem/router.

Chapter4 – Transportation employees

In addition to the expenses listed in Chapter 3, you may alsobe able to claim the cost of meals and lodging (including showers) if you are an employee of a transport business, a railway employee, or other transport employee. This cost includes any GST and provincial sales tax (PST), or HST, you paid on these expenses. You may be able to get a rebate of the GST/HST you paid. For more information readChapter11.

Note

You cannot deduct the cost of travel to and from work, or other expenses, such as most tools and clothing.

Employees of a transport business

You can claim the cost of meals and lodging if you meet all of the following conditions:

  • You work for an airline, railway, bus, or trucking company, or for any other employer whose main business is transporting goods, passengers, or both
  • You travel in vehicles your employer uses to transport goods or passengers
  • You regularly have to travel away from the municipality and the metropolitan area (if there is one) where your employer's relevant establishment (home terminal) is located
  • You regularly incur meal and lodging expenses while away from the municipality and the metropolitan area (if there is one) where your employer's relevant establishment (home terminal) is located. This means that you must generally be away from home overnight to do your job

You must reduce your claim for meal and lodging expenses by any non-taxable allowance or reimbursement you received or are entitled to receive from your employer.

For information on meal allowances and subsidized meals, see Information Circular IC73-21R9, Claims for Meals and Lodging Expenses of Transport Employees.

Railway employees

You can also claim the cost of meals and lodging when you meet one of the following conditions:

  • You work away from home for a railway company as a telegrapher or station agent in a relief capacity, or carry out maintenance and repair work for the railway company
  • You are a railway employee who works away from the municipality and the metropolitan area (if there is one) where your employer's relevant establishment (home terminal) is located. You also work at such a distant location that it is unreasonable for you to return daily to your home, where you support a spouse or common-law partner, or a dependant related to you

Other transport employees

Even if you do not meet all of the conditions listed in Employees of a transport business, you may still be able to claim the cost of meals and lodging you incur in the year. For example, you may be an employee whose main duty of employment is transporting goods, but your employer's main business is not transporting goods or passengers.

If you meet the conditions listed under Travelling expenses, you will still qualify to use the simplified method of meal reporting described under Meals. For more information about both sets of conditions, see InformationCircularIC73-21R9.

If your employer has paid or will pay you for any part of your meal and lodging expenses, subtract that amount from your claim.

How to claim your expenses

Complete parts1and2 of FormTL2, Claim for Meals and Lodging Expenses, and have your employer complete Part 3. Trips that qualify as an eligible trip for long-haul truck drivers should be reported in Part2B, and all other trips should be reported in Part2A. Claim your meal and lodging expenses on line22900 of your income tax and benefit return. You do not have to send FormTL2 with your return, but keep it in casethe CRAasks to see it later.

In the rest of this chapter,you will find information onhow to calculate your meal and lodging expenses. For more information about meal and lodging expenses, see Information CircularIC73-21R9.

Meals

To calculate your meal expenses, you can use either the simplified or detailed method, or in certain situations, the batching method. These methods are explained in this section.

The most you can deduct for meal expenses is 50% of your claim (unless you are a long-haul truck driver claiming meals for an eligible trip, as explained below under Meal expenses of long-haul truck drivers). For example, if you use the simplified method, which is based on a daily meal rate of $23 (includes sales tax) per meal, the most you can deduct is $11.50 ($23 × 50%) for each meal.

Under either the simplified or detailed method, you can claim one meal after every four hours from the departure time, to a maximum of three meals per day. For the purposes of calculating the maximum number of meals allowed, a day is considered to be a 24-hour period that begins at the departure time.

The simplified method – This is the easiest way to calculate your meal expenses since you do not have to keep receipts for your meals, although you do have to keep a detailed list of the trips you take in a record or log book.

The simplified method is based on a meal rate of $23 (includes sales tax) for each meal. Multiply the actual number of meals you ate by $23 (to a maximum of 3 meals per day) and report that amount in the “Meals bought” column of Part 2 – Trip and expense summary on Form TL2, Claim for Meals and Lodging Expenses.

Log book using the simplified method

Meals and lodging expenses - Simplified method
DateDeparture timeDestinationDateCheck in timeHours awayKm drivenNo. of meals
June 157:00MontréalJune 1716:00579007

The detailed method - If you choose to use the detailed method to calculate your meal expenses, you have to keep a log or record book itemizing each expense. You also have to keep receipts to support the amount you deduct. Report the actual amount you spent on meals on FormTL2 in the "Meals bought" column of Part 2 – Trip and expense summary.

Log book using the detailed method

Meals and Lodging expenses - Detailed method
DateTime in or Time outLocationRestaurantTypeCost
June 159:30Oshawa
June 15BellevilleParadise RestaurantLunch$9.20
June 15MontréalDunn's RestaurantDinner$22.99
June 15MontréalQuebec MotelLodging$64.50
June 16MontréalDunn's RestaurantBreakfast$5.75
June 16BellevilleParadise RestaurantLunch$17.45
June 1616:00Oshawa

The batching method – When you are part of a work crew, such as on a train, your employer may provide you with cooking facilities. If you buy groceries and cook meals either by yourself or as a group, each person can claim up to $46 for each day. As long as you do not claim more than this amount, you do not have to keep receipts. Report this amount on FormTL2 in the "Meals bought" column of Part 2 – Trip and expense summary.

Meal expenses of long-haul truck drivers
Meal and beverage expenses for long-haul truck drivers are deductible at a rate higher than the 50% permitted for other transportation employees. During eligible travel periods in 2023, meal and beverage expenses incurred are deductible at 80%.

You are a long-haul truck driver if you are an employee whose main duty of employment is transporting goods by way of driving a long-haul truck, whether or not your employer's main business is transporting goods, passengers, or both.

A long-haul truck is a truck or tractor that is designed for hauling freight and has a gross vehicle weight rating of more than 11,788 kg.

An eligible travel period is a period during which you are away from your municipality or metropolitan area (if there is one) for at least 24 hours for the purpose of driving a long-haul truck that transports goods at least 160 kilometres from the employer's establishment to which you regularly report to work.

Lodging and showers

You can deduct your lodging expenses. The costs of showers are also considered to be deductible as part of lodging expenses for transportation employees who may have slept in the cab of their trucks rather than at hotels. You need to keep your receipts to support the amount you deduct.

Trips to the United States

You can claim the meal and lodging expenses you incur while performing your duties as a transport employee in the United States (U.S.). If you are using the simplified method of reporting meal expenses, you are entitled to US $23per meal while in the U.S. The most you can deduct for meal expenses is 50% of your claim, just as it is for trips within Canada (unless you are a long-haul truck driver, as described in Meal expenses of long-haul truck drivers).

Calculate the total U.S. dollar amount of both the meal and lodging expenses incurred in the U.S. and convert these two totals to Canadian dollars by multiplying them by the Bank of Canada annual average U.S.exchange rate. You can get theexchange rate by going tothe Bank of Canada annual average exchange ratesor by callingthe CRAat 1-800-959-8281. Provide a summary of your trips to the U.S. in Part 2 – Trip and expense summary of FormTL2. Attach a more detailed list of these trips to the form.

Chapter5 – Employees working in forestry operations

You can deduct expenses for buying and using a power saw (including a chain saw or tree trimmer) if you meet all of the following conditions:

  • You work in forestry operations
  • You use a power saw to earn your employment income
  • You had to pay for the power saw under your contract of employment and your employer will not be reimbursing you

You can deduct the cost of a power saw in the year you buy it. However, you have to subtract from the purchase price of the new power saw the value of any trade-in or any amount you received from the sale of any power saw during the year.

When you file your income tax and benefit return, attach a statement that breaks down the cost of running the power saw. Also, keep with your records a copy of FormT2200, Declaration of Conditions of Employment, which has been completed by your employer.

Expenses to operate a power saw include any GST and provincial sales tax (PST), or HST, you paid. Enter your power saw expenses on line22900 of yourincome tax and benefit return. You may be able to get a rebate of the GST/HST you paid. For more information, readChapter11.

You cannot deduct expenses for travelling from your home to a place where you have to report to work on a regular basis. These expenses are personal. For example, you cannot deduct expenses for travelling from your home to a forest camp or to a cutting site if you go to that place on a regular basis. However, the motor vehicle expenses for travelling from a forest camp set up by your employer to the cutting site are incurred in the course of employment. These expenses are therefore deductible if you meet the conditions described in Allowable motor vehicle expenses (including capital cost allowance).

You cannot deduct expenses for board and lodging at a place where you have to report to work on a regular basis. For example, if your employer has a work camp and you report there on a regular basis, you cannot deduct expenses for board and lodging (for example, camp fees) at the work camp since it is considered your employer’s place of business while you are working there.

You cannot deduct the cost of horses and harnesses, snowmobiles, or all-terrain vehicles because these are capital expenditures. Also, you cannot deduct capital cost allowance or interest you paid on money borrowed to buy these things.

Chapter6 – Employed artists

This chapter has two parts:Part1 deals with employed artists' expenses in general andPart2 deals with musical instrument expenses.

Part1 – Artists' employment expenses

You can deduct expenses you paid in 2023 to earn employment income from an artistic activity if you did any of the following:

  • composed a dramatic, musical, or literary work
  • performed as an actor, dancer, singer, or musician in a dramatic or musical work
  • performed an artistic activity as a member of a professional artists' association that the Minister of Canadian Heritage has certified
  • created a painting, print, etching, drawing, sculpture, or similar work of art. For income tax purposes, it is not an artistic activity when you reproduce these items

These expenses include any GST and provincial sales tax (PST), or HST, you paid. You may be able to get a rebate of the GST/HST you paid.For more information, readChapter11.

The amount you can claim is limited to the lesser of:

a) the expenses you actually paid in 2023plus any amounts you carried forward from previous years

b) the lesser of:

  • $1,000
  • 20% of your employment income from artistic activities

minus the following amounts you deducted from your income from an artistic activity:

  • musical instrument expenses (readPart2)
  • interest for your motor vehicle (read the section called Interest expense)
  • capital cost allowance for your motor vehicle (readChapter 10)

If you have expenses you cannot claim because of the 20% or $1,000 limit, you can deduct them from artistic income you earn in a future year.

Enter the amount you can deduct on the "Artists' employment expenses" lineof FormT777, Statement of Employment Expenses.

If you earn artistic income from more than one employer, total your income and expenses before you calculate your claim. In other words, you cannot make a separate claim for each employer.

Note

As an employed artist, you can deduct expenses described in Chapter3, if you meet the required conditions of an employee earning a salary. If this is the case, you can choose to deduct these expenses separately from the other expenses you paid to earn artistic income. However, choose the option that gives you the greatest deduction in 2023, since you cannot carry forward any unused expenses that you can deduct in 2023.

Example

Barbara is a salaried employee whose employment income from artistic activities was $20,000 in 2023. During 2023, she paid $950 for advertising, $1,550 for travelling, and $350 for musical instrument expenses to earn this income. Since advertising and musical instrument expenses are not listed as deductible expenses of a salaried employee in Chapter 3, Barbara will choose the option to deduct these expenses separately as artists' employment expenses because it will allow a greater deduction for 2023. She meets the requirements for deducting her travelling expenses as explained in Chapter3 and her musical instrument expenses as discussed in Part2 of this chapter, and she can claim her advertising expenses as an artist's expense.

Barbara calculates her artists' employment expenses as follows:

The lesser of:

a) $950 (advertising expenses)

b) the lesser of:

  • $1,000
  • $4,000(20%of$20,000)

minus $350 (musical instrument expenses)

Amount b) is $1,000-$350=$650.

The lesser of a) and b) is $650.

Barbara calculates the amount to enter on line22900 of her income tax and benefit return as follows:

Travelling expenses

$ 1,550

Artists' employment expenses

$ 650

Musical instrument expenses

$ 350

Total to enter on line22900

$ 2,550

Part2 – Musical instrument expenses

If you are an employed musician, your employer may require you to provide your own musical instrument. If this is the case, you can deduct expenses you paid that relate to the musical instrument. Your musical instrument expenses include any GST and provincial sales tax (PST), or HST, you paid on these expenses. You may be able to get a rebate of the GST/HST you paid. For more information, readChapter11.

Deductible expenses

Although you cannot deduct the actual cost of your musical instrument, the amounts you can deduct for your musical instrument are:

  • maintenance costs
  • rental fees
  • insurance costs
  • capital cost allowance (if you own the instrument)

Enter the amount you can deduct on the "Musical instrument expenses" lineand the "Capital cost allowance for musical instruments" lineof FormT777 as appropriate.

However, the amount of musical instrument expenses you can deduct cannot be more than your income for the year from your employment as a musician after deducting all other employment expenses.

How to calculate your employment expenses

When you use your musical instrument for both employment and other purposes, divide the total instrument expenses among the different uses. For example, if you are using your instrument for employment, self-employment, and personal purposes, separate all three uses. You cannot deduct personal expenses.

Enter the total expenses for your employment income on line22900 of your income tax and benefit return.

Use the self-employment part of your musical instrument expenses to calculate the net self-employment income you report on line13700 of your income tax and benefit return. For more information, readGuideT4002, Self-employed Business, Professional, Commission, Farming, and Fishing Income.

Capital cost allowance

Use the back of FormT777 to calculate the amount of capital cost allowance you can claim for your musical instrument. For more information, readChapter 10.

Change in use

There are special rules for calculating the capital cost of depreciable property. These rules can apply when there is a change in use of the musical instrument from an income-earning purpose to some other purpose, or vice versa.For more information, readChapter 10andIncome Tax Folio S4‑F14‑C1, Artists andWriters.

Chapter7 – Employed tradespersons

You may be able to deduct the cost of eligible tools you bought in 2023 to earn employment income as a tradesperson. This cost includes any GST and provincial sales tax (PST), or HST that you paid. You may be able to get a rebate of the GST/HST you paid.For more information, readChapter11. When completing FormGST370, Employee and Partner GST/HST Rebate Application, see if Situation6 applies to you.

An eligible tool is a tool (including associated equipment such as a toolbox) that meets all of the following conditions:

  • You bought it to use in your job as a tradesperson and it was not used for any purpose before you bought it
  • Your employer certified it as being necessary for you to provide as a condition of, and for use in, your job as a tradesperson
  • It is not an electronic communication device (like a cell phone) or electronic data processing equipment (unless the device or equipment can be used only for the purpose of measuring, locating, or calculating)

Your employer has to complete and sign Form T2200, Declaration of Conditions of Employment. Have your employer complete question 11 of Part B of the form to certify that the tools being claimed were bought and provided by you as a condition of your employment as a tradesperson. Attach to Form T2200 a list of the tools you are claiming, as well as the related receipts. You do not have to include Form T2200, your receipts, or your list of tools with your income tax and benefit return, but keep them in casethe CRAasks to see them.

Deduction for tools

If you were a tradesperson in 2023, use the following formula to calculate your maximum tradesperson's tools deduction for the cost of eligible tools you bought in 2023:

Maximum deduction for eligible tools is the lesser of:

a) $1,000

b) the amount, if any, determined by the formula

A− $1,368where

A = the lesser of:

1. the total cost of eligible tools that you bought in 2023

2. your income from employment as a tradesperson for the year

plus the amount you received in 2023 under the Apprenticeship Incentive Grant and the Apprenticeship Completion Grant programs

minus the amount of anyApprenticeship Incentive Grant and Apprenticeship Completion Grantoverpayments that you had to repay in 2023

Enter your claim on the "Tradesperson's tools expenses" lineof FormT777, Statement of Employment Expenses.

Example

In 2023, Karsten is employed as an electrician with ABC Company, and he needs to purchase additional tools for his job. He paid $2,500 for the tools he needed, and he earned $45,000 in employment income in 2023 as an electrician.

He calculates his maximum deduction for eligible tools in 2023 as follows:

Maximum deduction for eligible tools is the lesser of:

a) $1,000

b) the amount, if any, determined by the formula

A− $1,368where

A = the lesser of:

  1. $2,500
  2. $45,000

Karsten's maximum deduction for 2023 is the lesser of $1,000 and $1,132($2,500$1,368). Karsten claims a deduction of $1,000 on line22900 of his 2023 income tax and benefit return.

Employed apprentice mechanics

You may also be able to deduct a part of the cost of eligible tools you bought in 2023 to earn employment income as an eligible apprentice mechanic.

You are an eligible apprentice mechanic if you meet all of the following conditions:

  • You are registered in a program established under the laws of Canada or of a province or territory that leads to a designation under those laws as a mechanic licensed to repair self-propelled motorized vehicles (such as automobiles, aircraft, boats, or snowmobiles)
  • You are employed as an apprentice mechanic

As an eligible apprentice mechanic, you must first calculate the tradesperson's tools deduction, if any, that you qualify for. You may qualify for this deduction if you bought eligible tools for your job in 2023. You can then complete the calculation described in the section called Deduction for tools for an eligible apprentice mechanic to determine if you can also make this claim in 2023.

An eligible tool is a tool (including associated equipment such as a toolbox) that meets all of the following conditions:

  • You bought the tool to use in your job as an apprentice mechanic and it was not used for any purpose before you bought it
  • The tool is certified by your employer as being necessary for you to provide as a condition of, and for use in, your job as an apprentice mechanic
  • The tool is not an electronic communication device (like a cell phone) or electronic data processing equipment (unless the device or equipment can be used only for the purpose of measuring, locating or calculating)

Your employer has to complete and sign FormT2200, Declaration of Conditions of Employment. Have your employer complete question12 of PartB of the form to certify that you bought and provided the tools you are claiming as a condition of your employment as an eligible apprentice mechanic. Attach to FormT2200 a list of the tools you are claiming, as well as the related receipts. You do not have to submit FormT2200 or your list of tools or receipts with your income tax and benefit return, but keep them in casethe CRAasks to see them.

Deduction for tools for an eligible apprentice mechanic

Use the following formula to calculate your maximum deduction for the cost of eligible tools you bought in 2023 if you were an eligible apprentice mechanic at any time in 2023:

Maximum deduction for eligible toolsFootnote 1 = (A-B)+C

where

A = the total cost of eligible tools that you bought in 2023Footnote 2

B = the lesser of:

1. the total cost of eligible tools that you bought in 2023 as calculated in A

2. the greater of:

  • $1,000 + the Canada employment amount claimed on line 31260 of your income tax and benefit return (max. $1,368)
  • 5% of:
    • your employment income as an eligible apprentice mechanic
    • plus the amount you received in 2023 under the Apprenticeship Incentive Grant and the Apprenticeship Completion Grant programs
    • minus any claim you made for the tradesperson's deduction for tools, and the amount of any Apprenticeship Incentive Grantoverpayments that you had to repay in 2023

C = the amount, if any, of the maximum deduction for eligible tools that you calculated for 2022 that you did not claim in 2022 (your carry forward amount from 2022, if any)

Enter your claim on the "Apprentice mechanic tools expenses" lineof FormT777, Statement of Employment Expenses.

If you do not want to claim the maximum deduction, you can carry forward the unused amount for use against income earned in a future year. You can deduct the unused amount against any type of income in a future year even if you are no longer employed as an eligible apprentice mechanic at that time.

Example 1

The Motor Company hired Bill as a second-year eligible apprentice mechanic on November 1, 2022. Based on the tools he bought during 2022, Bill calculated his maximum deduction for eligible tools in 2022 to be $3,500. He only claimed $1,500 of this amount on his 2022 income tax and benefit return. In 2023, Bill received $18,000 in income from his job as an eligible apprentice mechanic. In 2023, he received $1,000 under the Apprenticeship Incentive Grant program, and he also received income of $4,000 from other sources.

During September of 2023, Bill bought two eligible tools for $4,500. He already calculated and claimed a tradesperson's tools deduction of $1,000 for 2023. He had also claimed a Canada employment amount of $1,368.

Bill calculated his maximum deduction for eligible tools in 2023 as follows:

Maximum deduction for eligible tools = (A −B)+C

where

A = $4,500

B = the lesser of:

1. $4,500

2. the greater of:

  • $2,368($1,000+$1,368)
  • $900(5%of[$18,000+$1,000$1,000])

C = $2,000

Therefore, Bill's maximum deduction in 2023 is $4,132([$4,500$2,368] + $2,000) since it is less than his net income of $22,000 ({$18,000 + $1,000− $1,000} + $4,000). Bill claims his deduction of $4,132 on line 22900of his income tax and benefit return.

Disposition of tools

As a tradesperson (including an apprentice mechanic), you may decide to sell any or all of the eligible tools for which you claimed a deduction. If so, you must include, in your income in the year you sold the tool(s), the amount by which the proceeds of disposition of each tool is greater than the adjusted cost of the eligible tool sold. The proceeds of disposition of a tool is the amount of money you sold the tool for.

Adjust the original cost of each eligible tool you bought by using the following formula:

Adjusted cost of an eligible tool = D (D x [E/A])

where

D = the original cost of each eligible tool that you bought in 2023

E = the total of the tradesperson's tools deduction and apprentice mechanic tools deduction that you claimed in 2023Footnote 3

A = the total cost of all eligible tools that you bought in 2023Footnote 4

Complete a separate calculation for each eligible tool you bought in 2023.

Example 2

In Example1, Bill bought2 eligible tools for $4,500. Tool A and Tool B cost $2,500 and $2,000, respectively. Bill must calculate the adjusted cost of these tools. He calculates the adjusted cost of Tool A as follows:

Adjusted cost of Tool A = D (D x [E/A])

where

D= $2,500

EFootnote 5 = $1,000+$2,132(from Example1) = $3,132

A = $4,500

By applying this formula, the adjusted cost of Tool A is:

$2,500($2,500 x [$3,132/$4,500])

= $2,500$1,740

= $760

Similarly, the adjusted cost of Tool B is $608:

$2,000− ($2,000 x [$3,132/$4,500]).

Assume that Bill sells ToolA in 2024 for $1,500. The proceeds of disposition of ToolA ($1,500) is greater than its adjusted cost ($760). As a result, he would have to include the amount of $740($1,500−$760) as income on line 13000 of his 2024 income tax and benefit return. If the proceeds of disposition had been less than the adjusted cost of the tool, Bill would not have been able to deduct the difference.

Labour Mobility Deduction (for eligible tradespeople)

The Labour Mobility Deduction provides eligible tradespeople and apprentices working in the construction industry with a deduction for certain relocation expenses. To qualify for the labour mobility deduction (LMD), you must be aneligible tradespersonwho had aneligible temporary relocationand incurredtemporary relocation expenses.

This deduction applies to the 2023 and subsequent taxation years and allows an eligible tradesperson to deduct up to $4,000 in eligible temporary relocation expenses per year. The maximum amount of eligible temporary relocation expenses that could be claimed for a particular eligible temporary relocation is limited to50%of the eligible tradesperson’s employment income from construction activities at the eligible temporary work location in the year.

Eligible tradesperson

An eligible tradesperson is a tradesperson or an apprentice who:

  • has income from employment
  • performs their duties of employment in construction activities

Construction activities include the erection, excavation, installation, alteration, modification, repair, improvement, demolition, destruction, dismantling or removal of all or any part of a building, structure, surface orsub-surfaceconstruction, or any similar property.

Eligible Temporary Relocation

To qualify as an eligible temporary relocation the relocation must be temporary in nature and meet all of the following conditions:

  • The relocation is undertaken by the eligible tradesperson to enable them to perform their duties of employment as an eligible tradesperson at one or more temporary work locations situated in the same locality
  • Prior to the relocation, the eligible tradesperson ordinarily resided at a residence in Canada
  • The eligible tradesperson was required to be away from their ordinary residence for at least36 hours
  • During this period, the eligible tradesperson took up temporary lodging in Canada
  • The temporary lodging must be at least 150 kilometres closer to each temporary work location than the taxpayer’s ordinary residence
Note

A temporary work location is a location in Canada that is:

  • where the eligible tradesperson performs their duties of employment under a temporary employment contract
  • outside the same locality (for example a city) where the eligible tradesperson is ordinarily employed or carries on a business.

The temporary relocation deduction is calculated for each eligible temporary relocation. This means that you may have multiple temporary relocation deductions in 2023.

Example

John is a tradesperson that ordinarily works and resides in Toronto. John accepts a 3-week employment contract with a new employer that will require him to work on a construction site in Montreal. The distance between John’s ordinary residence in Toronto and the work location in Montreal is 550 kilometers. John rents a short-term apartment in Montreal that is 10 kilometres away from the work location. John’s ordinary residence in Toronto is more than 150 kilometres further from the work site than the temporary lodging in Montreal is from the work site. On the basis of this distance, the relocation will qualify as an eligible temporary relocation for purposes of the LMD.

Eligible temporary relocation expenses

An eligible temporary relocation expense is a reasonable expense incurred by the eligible tradesperson in the prior year, the current year or prior to February 1 of the following year for:

  • temporary lodging if, throughout the period of the temporary relocation, the eligible tradesperson maintains their ordinary residence as their principal place of residence and the ordinary residence remains available for their occupancy and is not rented to any other person
  • transportation for one round trip between the location where the eligible tradesperson ordinarily resides and the temporary lodging
  • meals consumed by the eligible tradesperson during the round trip between the ordinary residence and the temporary lodging
Note

If you have more than one temporary lodging during a temporary relocation (for example, you stay at two different hotels), the 150 kilometre-test described above will need to be satisfied for each temporary lodging.

When calculating your LMD for 2023, the eligible temporary relocation expenses you can claim from 2022 are limited to 50% of the employment income from that relocation earned in 2023.

A temporary relocation expense can be claimed in a tax year if the expense is incurred by the eligible tradesperson in the prior year, the current year or prior to February 1 of the following year provided the expense was not:

  • deducted in a prior year
  • otherwise deducted from the individual’s income for any tax year (such as the moving expenses deduction)
  • an expense for which the individual is entitled to receive a reimbursement, allowance, or any other form of assistance.

The eligible tradesperson must have earned enough employment income at the temporary work location.

Completing Form T777, Statement of Employment Expenses

To make a claim for the Labour Mobility Deduction complete the calculation found on page 2 of Form T777, Statement of Employment Expenses. The amount you calculate, will be entered on page 1, line 11 of the form T777.

There may be situations where the eligible tradesperson incurs eligible temporary relocation expenses that cannot be deducted under the labour mobility deduction rules in the year because the eligible tradesperson does not have enough employment income from the temporary relocation in the year or because the eligible expenses are more than the $4,000 maximum annual deduction. In those situations, the unused eligible temporary relocation expenses for the year may be claimed in the following tax year.

Example

Rakia begins an eligible temporary relocation on December 28, 2023. She incurs eligible temporary relocation expenses in December 2023 of $1,000 for a round trip flight between her ordinary residence and the temporary lodging, $100 for meals during her travel time and $400 for temporary lodging near the temporary work location for a total amount of $1,500. Rakia does not receive any employment income related to the temporary work location until January, 2024. Therefore, Rakia would not be able to deduct her eligible temporary relocation expenses in 2023 since she does not have employment income in 2023 related to the temporary relocation. However, she could include the 2023 expenses when calculating her temporary relocation deduction for 2024.

For 2023, Rakia would fill out the Line 11 – Calculation of labour mobility deduction on her T777 as follows:

Employment Expenses 2023 - Canada.ca (1)
  1. Rakia must include all of her eligible temporary relocation expenses incurred prior to February 1, 2024 in calculating her eligible temporary relocation expenses for 2023 and carry forward the portion that she cannot claim as a LMD in 2023 (in this case, $1,500)
  2. Rakia can claim her flight and other transportation expenses for one-round trip from her ordinary residence to the temporary lodging, however, other transportation expenses while she is at the temporary work location are not eligible relocation expenses (for example, car rental while at the temporary location)
  3. If Rakia does not maintain her ordinary residence (for example, she sublets it to another person), only her transportation and meals for the round trip will qualify as eligible temporary relocation expenses

The next example will show how Rakia would complete the section Line 11 – Calculation of labour mobility deduction on her T777 form for 2024.

Example

In 2024, Rakia earns $7,000 of employment income at the temporary work relocation. For this temporary relocation, she has no additional transportation expenses (as her round trip was paid for in 2023), $100 for meals consumed during the return flight between her temporary lodging and ordinary residence, and $650 in temporary lodging expenses totaling $750, plus the carry forward from 2023 of $1,500. Her total eligible temporary relocation expenses would be $2,250. She claimed her round trip flight in the carry forward at line 33.

For 2024, Rakia would fill out the section Line 11 – Calculation of labour mobility deduction on her T777 as follows:

Employment Expenses 2023 - Canada.ca (2)

Chapter 8 – Employees working at home

Employees who worked at home in 2023 and meet certain conditions, will be eligible to deduct home office expenses (including work-space-in-the-home expenses, office supplies and other expenses such as employment use of a cell phone, or long distance calls for employment purposes).

If you worked from home to earn employment income and business income, you can only deduct home office expenses from the income (employment or business) to which the expenses relate, but you cannot deduct the same amounts from both employment and business income. For information about the conditions which must be met by self-employed persons, see Income Tax Folio S4-F2-C2, Business Use of Home Expenses.

Who is eligible?

You are eligible to deduct home office expenses you paid if you meet the following conditions:

  • You worked more than 50% of the time from home for a period of at least four consecutive weeks
  • The expenses were directly related to your work

However, you cannot deduct home office expenses if all of your expenses were or will be reimbursed by your employer.

What can you claim?

You will find below examples of eligible and non-eligible home office expenses. For additional home office expenses you may be able to deduct, go to Home office expenses for employees.

Eligible expenses

Eligible expenses include:

  • rent paid for a house or apartment where you live
  • electricity, heat, water or the utilities portion of your condominium fees
  • home internet access fees
  • maintenance (such as minor repairs, cleaning supplies, light bulbs or paint)
  • supplies (such as stationery items, pens, folders, sticky notes, postage, toner or ink cartridge)
  • employment use of a basic cell phone service plan
  • long distance calls for employment purposes

If you are a commission employee, you can also claim expenses that reasonably relate to earning commission income for the following:

  • property taxes
  • home insurance
  • lease of items (such as a cell phone, computer, laptop, tablet or fax machine)

Non-eligible expenses

You cannot claim any of the following:

  • capital cost allowance
  • mortgage interest
  • principal mortgage payments
  • home internet connection fees or the portion of fees related to the lease of a modem/router
  • capital expenses (including replacing windows or flooring, furnace)
  • office equipment (including printer, fax machine, calculator, briefcase, laptop case, or bag)
  • monthly basic rate for a landline telephone
  • cell phone connection, or license fees
  • purchase of items such as a cell phone, computer, laptop, tablet or fax machine.
  • computer accessories (including monitor, mouse, keyboard headset, microphone, speakers, webcam or router)
  • other electronics (such as television, smart speaker or voice assistant)
  • furniture (including desk or chair)

To claim your employment expenses, use Form T777, Statement of Employment Expenses, and Form T2200, Declaration of Conditions of Employment.

For more information on Form T777, read Chapter 2 – Employees earning commission income or Chapter 3 – Employees earning a salary.

Calculating your work‑space-in‑the‑home expenses

You will need to calculate your employment-use percentage. To do so you must determine:

  • the type of work space used
  • the percentage of your home that you use as a workspace
  • the number of hours you use the space for work (this does not apply if you are using a designated space)
  • the number of workers that worked from home

Type of work space

Common area

A common area is a space that has other purposes besides your work (for example, working at a kitchen table or using the family computer room). If you worked in a common area at home, you have to determine the employment-use of the space using the number of hours you work.

Designated room

A designated room is a space you use only for work (forexample, a spare room). If you worked in a designated room for the period you worked at home, your claim is not affected by the number of hours you use the space for work.

One employee working in the home

If only one person in your home uses a work space, that person will claim the employment-use of the work space.

Example

Laeticia works from home and has a spare room that she only uses for work. Her spare room represents 14% of her apartment. As she has a dedicated space, she will multiply her allowable expenses by 14% to determine her employment-use amount.

Another option for Laeticia is for her to use her dining room table. Laeticia’s dining room represents 14% of the total space of her apartment and is used for work for 40 hours out of a total 168 hours in the week.

To determine her employment-use amount, Laeticia must first determine her employment-use percentage. This is how she will calculate the percentage:

(40 hours ÷ 168 hours) x 14% = 3.33%

Laeticia will multiply her allowable expenses by 3.33% to determine her employment-use amount.

Multiple employees working in the same home

Different work spaces

If there are multiple employees working in the same home and using different work spaces, each employee will calculate the employment expenses separately as shown in the section “One employee working in the home.”

Sharing a designated room

If there is more than one employee working in the same home sharing a designated work space, each employee will calculate the employment use of the work space they are sharing.

Example

Nneka and Sergio both worked from home and they shared a designated office in their home (office used only for work). The designated office space represents 12% of the total finished area of their home and they each use half of the space to do their work. They both meet all the eligibility criteria.

  • 12 m2 (office area)
  • times 50% (portion of the space they each used)
  • equals 6 m2 each
  • divided by 100 m2 (total finished area of the house)
  • times 100 (to convert into a percentage)
  • equals 6% (percentage of home used for their work space)

Nneka and Sergio have a designated work space so the number of hours they work does not affect the calculation.

They each use 6% of the home for their work space.

Nneka and Sergio will each multiply their allowable expenses by6% to determine their employment-use amount.

Sharing the same common area

When there is more than one employee working in the same home and sharing the same common work space, each employee will calculate their employment use of the work space they are sharing.

Example

Sam and Terry rent an eight-room house. They have been working from home using their dining room table and they each use half of the space. They both meet all of the eligibility criteria.

The dining room is 12m2.

  • 12 m2 (dining room)
  • times 50% (portion of the space they each used)
  • equals 6 m2 each
  • divided by 100 m2 (total finished area of the house)
  • times 100 (to convert into a percentage)
  • equals 6% (percentage of home used for their work space)

Sam worked 40 hours a week and Terry worked 25 hours per week, both at the dining table. Since they both used the table (common area) for work, they need to determine their employment-use percentage as follows:

For Sam
  • 6% (percentage of home used for his work space)
  • times 23.8% (40 hours worked divided by168 total hours in a week: 40 ÷ 168)
  • times 100 (to convert into a percentage)
  • equals 1.4% (employment use percentage)

Sam will multiply his allowable expenses by1.4% to determine his employment use amount.

For Terry
  • 6% (percentage of home used for her work space)
  • times 14.9% (25 hours worked divided by168 total hours in a week 25 ÷ 168)
  • times 100 (to convert into a percentage)
  • equals 0.9% (employment use percentage)

Terry will multiply her allowable expenses by0.9% to determine her employment-use amount.

Individuals working in the home who earn employment and business income

If you use the same work space to earn employment and business income, you will need to divide your work-space-in-the-home expenses on a reasonable basis between employment and business use.

Change of work space

If you use different work spaces in your home, or you move to a new property, you will need to claim the expenses you paid for each work space separately.

Example

Wade is a salaried employee who worked from home from January1 until December31,2023. Wade used a designated room that was 20% of the total square footage of his rented two bedroom apartment. Wade paid the following expenses for this period:

  • Supplies: $75
  • Cell phone, long distance calls: $180
  • Electricity: $1,500
  • Heat: $800
  • Water: $1,000
  • Internet: $400
  • Maintenance: $60 (he painted an unfinished room and used it as his designated work space)
  • Rent: $7,500

During that period Wade earned $4,000 from his employment. Wade calculates his employment-use amount and completes his Form T777 as follows:

He totals his electricity, heat, water, internet ($3,700) and adds his rent ($7,500): $3,700 + $7,500 = $11,200.

He then multiplies this amount by20%: $11,200 x 20% = $2,240.

Wade can add his maintenance costs of $60 to this amount because he is using a designated space:$2,240+$60=$2,300 (employment-use amount). Because of space limitations, the entire form is not reproduced.

Employment Expenses 2023 - Canada.ca (3)
Employment Expenses 2023 - Canada.ca (4)

Chapter9 – Motor vehicle expenses

You can deduct expenses you paid to run a motor vehicle you use to earn employment income. Your motor vehicle expenses include any GST and provincial sales tax (PST), or HST, you paid on these expenses.

You may be able to get a rebate of the GST/HST you paid.For more information, read GST/HST rebate in Chapter 11.

If you are an employee earning commission income, you can deduct expenses for your vehicle as long as you meet the conditions outlined in the section called Employment conditions.

If you are an employee earning a salary, you can deduct expenses for your vehicle as long as you meet the conditions outlined in the section called Allowable motor vehicle expenses (including capital cost allowance).

Keeping records

Since you can deduct motor vehicle expenses only when they are reasonable and you have receipts to support them, keep a record for each vehicle you used. The record should include the total kilometres you drove as well as the kilometres you drove to earn employment income. The record for each trip you took to earn employment income should list the date, destination, purpose, and number of kilometres. Record the odometer reading of each vehicle at the beginning and again at the end of the year.

If you change motor vehicles during the year, record the odometer reading of each vehicle when you buy, sell, or trade it. Write down the dates as well.

Deductible expenses

The types of expenses you can deduct include:

  • fuel (such as gasoline, propane, and oil) and electricity
  • maintenance and repairs
  • insurance
  • licence and registration fees
  • capital cost allowance (readChapter 10)
  • eligible interest you paid on a loan used to buy the motor vehicle (read the section called Interest expense)
  • eligible leasing costs (read the section called Leasing costs)

Enter these amounts in the "Calculation of Allowable Motor Vehicle Expenses" area of FormT777.

What kind of vehicle do you own?

For tax purposes, there are two types of vehicles you should know about. They are motor vehicles and passenger vehicles(or zero-emission passenger vehicles).

The kind of vehicle you use may affect the expenses you can deduct. If you own or lease a passenger vehicle or a zero-emission passenger vehicle, there may be a limit on the amounts you can deduct for capital cost allowance (CCA), interest, and leasing costs.

Motor vehicle

A motor vehicle is an automotive vehicle designed or adapted for use on highways and streets. It is not a trolley bus, or a vehicle designed or adapted to be operated exclusively on rails.

Passenger vehicle

A passenger vehicle is a motor vehicle (other than a zero-emission vehicle) designed or adapted primarily to carry people on highways and streets. It seats a driver and no more than eight passengers. Most cars, station wagons, vans, and some pick-up trucks are passenger vehicles. They are subject to the limits for CCA, interest, and leasing costs.

A passenger vehicle does not include:

  • an ambulance
  • clearly marked police and fire emergency-response vehicles
  • clearly marked emergency medical services vehicles used to carry paramedics and their emergency medical equipment
  • a motor vehicle you bought to use mainly (more than 50%) as a taxi, a bus to transport passengers, or a hearse in a funeral business
  • a motor vehicle you bought to sell, rent, or lease in a motor vehicle sales, rental, or leasing business
  • a motor vehicle (except a hearse) you bought to use in a funeral business to transport passengers
  • certain vans, pick-up trucks, or similar vehicles (for more details, read the Vehicle definitions chart)

The Vehicle definitions chart should help you determine what type of vehicle you have. It does not cover every situation, but it should give you a better idea of howthe CRAdefines vehicles you bought or leased.

Zero-emission passenger vehicle (ZEPV)

A ZEPV means an automobile of a taxpayer that is included in Class 54. The following are special rules applicable to a ZEPV:

  • The capital cost of the ZEPV will be restricted to a prescribed amount for the purpose of calculating the CCA. For 2023, the prescribed amount will be $61,000, plus the federal and provincial sales taxes that would have been paid if the ZEPV was purchased for $61,000 (before the application of federal and provincial sales tax)
  • When a ZEPV whose capital cost is subject to the above restriction, is disposed of, its proceeds of disposition will be adjusted. Specifically, the proceeds of disposition will be multiplied by a fraction equal to the ratio of the capital cost (that is the prescribed amount) of the vehicle divided by the actual costFootnote 6 of the vehicle

Joint ownership

If you and somebody else own or lease the same passenger vehicle, the limits on CCA, interest, and leasing costs still apply, and in case of zero-emission passenger vehicles, the limits on CCA and interest will apply. The total amount the joint owners can claim cannot be more than the amount that would be allowed if only one person had owned or leased the vehicle.

Employment use of a motor vehicle

If you use a motor vehicle for both employment and personal use, you can deduct only the percentage of expenses related to earning income. To support the amount you can deduct, keep a record of both the total kilometres you drove and the kilometres you drove to earn employment income.The CRAconsiders driving back and forth between home and work as personal use.

If you use more than one motor vehicle to earn employment income, calculate the expenses for each vehicle separately.

Interest expense

You can deduct interest you paid on money you borrowed to buy a motor vehicle, passenger vehicle or zero-emission passenger vehicle that you use to earn employment income. Include the interest you paid when you calculate your allowable motor vehicle expenses.

If you use a passenger vehicleor a ZEPV to earn employment income, there is a limit on the amount of interest you can deduct when buying it. Use the "Available interest expense for passenger vehicles or zero-emission passenger vehicles chart" to calculate the amount you can deduct. Enter your available interest expense amount on line 26of FormT777.

Available interest expense for passenger vehicles or zero-emission passenger vehicles chart

Total interest paid in the year

$

A

$10 x the number of days for which interest was paid

$

B

The available interest expense is the lower of amountA and amountB.

Vehicle definitions chart
Type of vehicleSeating (includes driver)Business use in year boughtor leasedVehicle definition
Coupe, sedan, station wagon, sports car, or luxury car1 to 91% to 100%passenger
Pick-up truck used to transport goods or equipment1 to 3more than 50%motor
Pick-up truck (other than above)Footnote 71 to 31% to 100%passenger
Pick-up truck with extended cab used to transport goods, equipment, or passengers4 to 990% or moremotor
Pick-up truck with extended cab (other than above)Footnote 74 to 91% to 100%passenger
Sport-utility used to transport goods, equipment, or passengers4 to 990% or moremotor
Sport-utility (other than above)4 to 91% to 100%passenger
Van or minivan used to transport goods or equipment1 to 3more than 50%motor
Van or minivan (other than above)1 to 31% to 100%passenger
Van or minivan used to transport goods, equipment, or passengers4 to 990% or moremotor
Van or minivan (other than above)4 to 91% to 100%passenger

Note

A passenger vehicle or a motor vehicle may also qualify as a zero-emission vehicle or a zero-emission passenger vehicle.

Leasing costs

You can deduct amounts you paid to lease a motor vehicle you used to earn employment income. Include the leasing costs you paid when you calculate your allowable motor vehicle expenses.

If you use a passenger vehicle to earn employment income, there is a limit on the amount of leasing costs you can deduct.

Use the chart below to calculate your eligible leasing costs for a passenger vehicle leased after December 31, 2000. Enter your eligible leasing costs on line 27of FormT777.

Note

Most leases do not include items such as insurance, maintenance, and taxes. You have to pay these amounts separately. Therefore, list these expenses separately on Form T777. Do not include them in your calculation of eligible leasing costs.

If the lease agreement for your passenger vehicle does include items such as insurance, maintenance, and taxes, include them as part of the lease charges in your calculation.

Repayments and imputed interest

When you lease a passenger vehicle, you may have either a repayment owing to you, or you may have imputed interest. If this is your situation, you cannot use the leasingchart below. Instead, contact the CRA.

Imputed interest is interest that would be owing to you if you were paid interest on money you deposited to lease a passenger vehicle. You can only consider imputed interest as leasing costs on a passenger vehicle if all the following apply:

  • You made one or more deposits for the leased passenger vehicle
  • All deposits are refundable
  • The deposits total more than $1,000

Eligible leasing costs for passenger vehicles leased after December31,2000

Enter the total lease charges paid for the vehicle in 2023

$

1

Enter the total lease payments deducted for the vehicle before 2023

$

2

Enter the total number of days the vehicle was leased in 2023 and previous years

$

3

Enter the manufacturer's list price

$

4

$42,353Footnote 8 + GST Footnote 9 and PST Footnote 9, or HST Footnote 9

$

5

Enter the amount from line4 or line5, whichever is more

$

× 85%

$

6

($950Footnote 10 + GST Footnote 9 and PST Footnote 9, or HST Footnote 9) x line3 =

$

÷ 30 =

$

− line 2

$

7

($36,000Footnote 11 + GST Footnote 9 and PST Footnote 9, or HST Footnote 9) xline1 =

$

÷ line 6

$

8

Your eligible leasing cost is the lower of the amounts on line7 and line8.

Example

OnFebruary1,2023, Tom, a resident of Nova Scotia, began leasing a car that meets the definition of a passenger vehicle. He used the car to earn employment income. Tom will complete the chart below using the following information for2023:

Monthly Lease payment

$500

Lease payments made for 2023

$5,500

Number of days the car was leased in 2023

334

Manufacturer's suggested list price

$28,000

HST ($42,353 x 15% =$6,353)

$6,353

HST ($950 x 15% = $143)

$143

HST ($36,000 x 15% =$5,400)

$5,400

Total lease charges paid for the vehicle in 2023

$5,500

1

Total lease payments deducted for the vehicle before 2023

$0

2

Total number of days the vehicle was leased in 2023 and previous years

334

3

The manufacturer's list price

$28,000

4

$42,353 +$6,353

$48,706

5

Enter the amount from line 4 or line 5, whichever is more

$48,706

× 85%

$41,400

6

($950 + $143 = $1093) x 334 =

$365,062

÷ 30 =

$12,169 − line 2

$12,169

7

($36,000 + $5,400 = $41,400) x $5,500 =

$227,700,000

÷$41,400

$5,500

8

Tom would enter $5,500 (the lower of the amounts on line 7 and line 8) on line 25 of Form T777.

Chapter 10 – Capital cost allowance (depreciation)

You cannot deduct the cost of a property, such as a vehicle or musical instrument that you use to earn your income. However, you can deduct a percentage of the property's cost. The part of the cost you can deduct or claim is called depreciation or, for income tax purposes, capital cost allowance (CCA).

Definitions

You may need to know the meaning of certain terms before you can determine your claim for CCA.

Accelerated investment incentive property (AIIP) is a property (other than property included in class 54 or 55) that meets the following conditions:

  • You acquired it after November 20, 2018, and becomes available for use before 2028
  • No CCA deduction or terminal loss has been claimed on the property before you acquired it, if the property was acquired from a non-arm's length party or on a tax-deferred roll-over

Accelerated Investment Incentive will provide an enhanced first-year allowance for certain eligible property that is subject to the Capital Cost Allowance (CCA) rules. In general, the incentive will be made up of two elements:

  • applying the prescribed CCA rate for a class to up to one and a half times the net addition to the class for the year
  • suspending the existing CCA half-year rule (and equivalent rules for Canadian vessels and class 13 property)

Available for use – generally, the earlier of:

  • the time the property is first used by the claimant to earn income
  • the time the property is delivered or is made available to the claimant and is capable of producing a saleable product or service

Capital cost is the amount on which you first claim CCA. Generally, the capital cost of the property is what you pay for it. Capital cost also includes items such as delivery charges, the GST and provincial sales tax (PST), or the HST.

Depreciable property is any property on which you can claim CCA. Depreciable properties are usually grouped into classes. Your CCA claim is based on the class of your property.

Fair market value is usually the highest dollar value you can get for your property in an open and unrestricted market, between a willing buyer and a willing seller who are acting independently of each other.

Proceeds of disposition is usually the amount you received or will receive for your property. In most cases, it refers to the sale price of the property. When you trade-in a property to buy a new one, your proceeds of disposition is the amount you receive for the trade-in.

Undepreciated capital cost (UCC) is the balance of the capital cost left for further depreciation at any given time. The amount of CCA you claim each year will lower the UCC of the property.

Can you claim CCA?

If you are an employee earning commission income, you can claim CCA on your vehicle if you meet the conditions outlined in the section called Employment conditions.

If you are an employee earning a salary, you can claim CCA on your vehicle if you meet the conditions outlined in the section called Allowable motor vehicle expenses (including capital cost allowance)

If you are an employed musician, you can claim CCA on a musical instrument if you had to provide the musical instrument as a condition of employment.

You do not have to claim the maximum amount of CCA in any given year. You can claim any amount you want, from zero up to the maximum allowed for the year.

Use the back of FormT777, Statement of Employment Expenses, to calculate your CCA claim. You will findtwo copies of Form T777 in this guide.

For more information on CCA, readInterpretation BulletinIT-522R Archived -Vehicle, Travel and Sales Expenses of Employees.

Classes of depreciable properties

Depreciable properties are usually grouped into classes. To claim CCA, you should know about the following classes.

Class8

The maximum CCA rate for this class is 20%. Musical instruments are included in Class8.

Class10

The maximum CCA rate for this class is 30%.

You include motor vehicles and some passenger vehicles in Class10. Motor vehicles and passenger vehicles are defined in the section called What kind of vehicle do you own?.

Your passenger vehicle can belong to either Class10 or Class10.1. You only include a passenger vehicle in Class10.1 if it meets certain conditions.Theseconditions areexplained in the following section.

Class10.1

The maximum CCA rate for this class is 30%.

The maximum capital cost of each vehicle that may be included in Class10.1 is now$36,000 plus GST and provincial sales tax (PST), or HST.

Include your passenger vehicle in Class10.1 if it meets one of the following conditions:

  • You acquired it after December31,2000, and it cost you more than $30,000
  • You acquired it after December 31, 2021, and it cost you more than$34,000
  • You acquired it after December 31, 2023, and it cost you more than$36,000

If your passenger vehicle does not meet any of these conditions, then it belongs in Class10.

To determine what class your passenger vehicle belongs to, do not include the GST and PST, or HST, when calculating the cost of the vehicle.

The following compares the twoCCA classes for vehicles:

Comparison list of the two CCA classes for vehicles
Class10 Class10.1
CCA rate 30% 30%
Group all vehicles in one class yes no
List each vehicle separately no yes
Maximum capital cost no yes
50% rule on acquisitions yes yes
Half-year rule on sale no yes
Recapture on sale or trade-in yes no
Terminal loss on sale or trade-in no no

Because of the differences between Class10 and Class10.1, the capital cost allowance schedule on the back of FormT777, Statement of Employment Expenses, is divided into2 separate parts (PartA and PartB).

Use PartA to calculate CCA for both Class8 and Class10 property, since the rules for these two classes are similar.

Use PartB to calculate CCA on Class10.1 property only. List each Class 10.1 vehicle on a separate line. Calculate CCA separately for each vehicle listed.

Zero-Emission Vehicles

There are two CCA classes for zero-emission vehicles acquired after March 18, 2019, which become available for use before 2028.

Class 54 motor vehicles and passenger vehicles excluding taxicabs and automobiles used for lease and rent

The CCA rate for this class is 30% but a higher deduction (up to a maximum of 100%) may apply for certain eligible vehicles acquired after March 18, 2019, and before January 1, 2028, (phase out starting in 2024).

The capital costs will be deductible up to a limit of $61,000 plus sales tax for 2023 for zero-emission passenger vehicles. For 2022, the deductible limit was $59,000 and for 2019 to 2021, it was $55,000. The limit will be reviewed annually and special rules will apply in the year of disposition for such vehicles where the capital costs exceed that limit. Read Column 5 – Proceeds of dispositions in the year.

Class 55 for automobiles for lease or rent and taxicabs

The CCA rate for this class is 40%, but a higher deduction (up to a maximum of 100%) may apply for certain eligible vehicles acquired and available for use after March 18, 2019, and before January 1, 2028 (phase out starting in 2024).

To be eligible under Class 54 or Class 55, a zero-emission vehicle needs to meet all the following criteria:

  • It is a zero-emission vehicle acquired after March 18, 2019 or a used zero-emission vehicle (ZEV) acquired after March 1, 2020 that became available for use before 2028 and included in Class 54 or 55
  • An assistance has not been paid by the Government of Canada under the federal purchasing incentive
  • It is a vehicle that was not subject to a prior CCA or terminal loss claim, it cannot have been acquired by a taxpayer on a tax-deferred “rollover” basis nor previously owned or acquired by the taxpayer or a non- arm’s length person or partnership
  • It is essentially a motor vehicle for use on streets and highways (excluding a trolley bus or vehicle operated exclusively on rails)
  • It is a plug-in hybrid with battery capacity of at least 7kWh or is fully one of the following:
    • electric
    • powered by hydrogen

An enhanced first-year CCA with the following phase-out period is available:

  • 100% after March 18, 2019, and before 2024
  • 75% after 2023 and before 2026
  • 55% after 2025 and before 2028

The enhanced first year allowance will be calculated by:

1.increasing the net capital cost addition to the new class for property that becomes available for use before 2028, and applying the prescribed CCA rate for the class as described below:

For Class 54, applying the prescribed CCA rate of 30% to:

  • 2 1/3 times the net addition to the class for property that becomes available for use before 2024
  • 1 1/2 times the net addition to the class for property that becomes available for use in 2024 or 2025
  • 5/6 times the net addition to the class for property that becomes available for use after 2025 and before 2028

For Class 55, applying the prescribed CCA rate of 40% to:

  • 1 1/2 times the net addition to the class for property that becomes available for use before 2024
  • 7/8 times the net addition to the class for property that becomes available for use in 2024 or 2025
  • 3/8 times the net addition to the class for property that becomes available for use after 2025 and before 2028

2.suspending the existing CCA half year rule

The CCA will be applicable on any remaining balance in the new classes using the specific rate for the new class.

How to calculate capital cost allowance

The following information will help you complete Part A and Part B of the capital cost allowance schedule on FormT777. If this is the first year you are claiming CCA, skip column2, and start with column3. If this is not the first year you are claiming CCA, start with column2. Then complete the rest of the columns as they apply.

Part A – Classes 8, 10, 54, and 55 property

Column2 – Undepreciated capital cost at the start of the year

If you claimed CCA in any previous year, record in this columnthe undepreciated capital cost (UCC) of the property at the end of last year. If you completed Part A of form T777 in 2022, you would have recorded this amount in column13. However, if you received a GST/HST rebate for a vehicle or musical instrument in 2023, you have to reduce your opening UCC by the amount of the rebate.

Column3 – Cost of additions in the year

If you acquired depreciable property in 2023, enter the total capital cost of the property on the appropriate line.

If you owned property for personal use and then started using it for employment in 2023, there is a change in use. In most cases when this happens, the amount you will enter in column3 is the fair market value of the property at the time you start using the property for employment.

For example, John bought a car in 2018 for $19,000. In 2023, he started using it for employment. By checking car dealerships and the newspapers, John determines its fair market value is $11,000. Therefore, he enters $11,000 in column3.

To determine what class your passenger vehicle belongs to, use the price of the car before you add GST and any PST, or HST. Once you have determined in which class your vehicle belongs to, add the GST and PST, or HST that you paid to the vehicle's capital cost.

For example, in 2023, you bought a passenger vehicle for $32,000 plus HST of $4,160. Your vehicle belongs in Class10 even though its capital cost is $36,160($32,000+$4,160), since your cost before the HST was $32,000. You would enter $36,160 in column3 for Class10 property.

For information on Class10.1 property, read the section called PartB – Class10.1 property.

Column 4 –Cost of additions which are accelerated investment incentive properties AIIP or zero-emission vehicles ZEV

Enter in column 4 the cost of additions that are AIIP or ZEV from Class 54 or 55. These properties must be acquired and available for use after November 20, 2018 for AIIP and acquired after March 18, 2019 for ZEV. This cost is a part of the total cost of additions in column 3 and cannot be higher than the number in column 3.

If no ZEV property is acquired after March 18, 2019 and no AIIP is acquired after November 20, 2018, enter 0 in this column.

To be eligible for the accelerated investment incentive, or the enhanced CCA deduction for ZEVs, the property must become available for use in the year.

For more information on the accelerated investment incentive and how it impacts your CCA calculation, go toAccelerated investment incentive.

Column 5 – Proceeds of disposition in the year

For depreciable property you disposed of in 2023, enter the lesser of:

  • the proceeds of disposition of the property, minus the related outlays and expenses
  • the capital cost of the property
Note

The proceeds of disposition of a zero emission passenger vehicle that has been included in Class 54 and that is subject to the $61,000 capital cost limit will be adjusted based on a factor equal to the capital cost limit of $61,000 as a proportion of the actual cost of the vehicle.

For dispositions after July 29, 2019, the actual cost of the vehicle also will be adjusted for any payments or repayments of government assistance that you may have received or repaid for the vehicle.

Column 6 – Undepreciated capital cost after additions and dispositions

Enter the amount you get after you add column2 to column3 and subtract column 5.

You cannot claim CCA when the amount in column 6 is one of the following:

  • negative (recapture)
  • positive and you do not have any property in the class at the end of the year (terminal loss)

Recapture of capital cost allowance – If the amount in column 6 is negative, you have a recapture of CCA. Include the amount as income on line10400of your income tax and benefit return for 2023.

Terminal loss – If the amount in column 6 is positive and you no longer own any property in that class, you have a terminal loss. You cannot deduct the terminal loss from employment income.

Column 7 – Proceeds of dispositions available to reduce additions of AIIP or ZEV

This column calculates the adjustments under certain circumstances to the additions for the year where there is also a disposition in the year.

In case of AIIP, if the UCC of a class increases in a year by an investment in both AIIP, and non-AIIP, and an amount (for example, a disposition) reduces the UCC of the class, you must first reduce the cost of non-AIIP additions before reducing the cost of AIIP additions.

To determine which portion of your proceeds of dispositions, if any, will reduce the cost of your AIIP or ZEV additions, take proceeds of disposition in column 5 minus the cost of additions in the year in column 3 plus the cost of additions for AIIP properties in column 4. If the result is negative enter “0.”

If no AIIP or ZEV were acquired, you do not need to use this column.

Column 8 – UCC adjustment for current-year additions of AIIP and ZEV

This column calculates the enhanced UCC amount used to determine the additional CCA for AIIP or ZEV.

For this column, reduce the cost of AIIP or ZEV additions in column 4 by proceeds of disposition available to reduce the AIIP or ZEV additions as calculated in column 7. Multiply the result by the following factor:

  • 2 1/3 for property in Classes 54
  • 1 1/2 for property in Class 55
  • 0.5 for all other property that is AIIP

These factors will change for properties that become available for use after 2023 and the incentive is completely phased out for properties available for use after 2027.

If no AIIP or no ZEV were acquired, enter 0 in this column.

Column 9 – Adjustments for current-year additions

You can only claim CCA on 50% of your net additions (additions minus dispositions) of Class 8 or Class 10 properties in 2023. This is known as the 50% rule. The 50% rule does not apply to AIIP or ZEV. Calculate the net first year additions that are subject to the 50% rule by entering 50% of the amount you get when you subtract column 5 and column 4 from column 3. If the result is negative, enter 0 in column 9.

Column 10 – Base amount for capital cost allowance

Enter the amount you get when you subtract column 9 from column 6 plus column 8. Base your CCA claim, if any, on the amount in this column. You can only claim CCA on the balance remaining in column 10 when the amount is positive and you still have property in the class at the end of the year.

Column 12 – Capital cost allowance for the year

You can only claim CCA if you were still using the property for employment at the end of 2023. If you started using a property for employment part way through the year, you can claim CCA on the property for the full year. You do not have to limit your CCA claim to the part of the year you used the property for employment, the 50% rule is there for that. If you stopped using the property for employment during the year and there is no property left in the class, you cannot claim any CCA on the property for the year.

Enter the CCA you want to claim for 2023. The most you can claim for a Class 10 property is 30% of the amount in column 10. The most you can claim for a Class 8 property is 20% of the amount in column 10.

Column13 – UCC at the end of the year

Enter the amount you get when you subtract column 12 from column 6. This is your UCC at the end of 2023.

Part B – Class10.1 property

List each Class10.1 vehicle on a separate line.

Column2 – Undepreciated capital cost at the start of the year

If you claimed CCA in any previous year for a Class10.1 vehicle, record in this columnthe undepreciated capital cost (UCC) of that vehicle at the end of last year. For instance, if you completed Part B of FormT777 in 2022, you would have recorded this amount in column8. However, if you received a GST/HST rebate for that vehicle in2023, you have to reduce your opening UCC by the amount of the rebate.

Column3 – Cost of additions in the year

To determine what class your passenger vehicle belongs to, use the price of the car before you add the GST and any PST, or HST. However, include the GST and PST, or HST, in the vehicle's capital cost.

If you owned a passenger vehicle for personal use and then started using it for employment in 2023, there is a change in use. In most cases when this happens, the amount you will enter in column3 is the fair market value of the property at the time you start using the property for employment.

For a passenger vehicle you acquired in 2023 that cost you more than $36,000 before GST and PST, or HST, no matter how much more than $36,000 it cost, the amount you record is $36,000 plus the GST and PST, or HST, that you would have paid on $36,000.

For example, if you bought a passenger vehicle in2023 that cost $36,000 before the GST and PST, or HST, your vehicle belongs in Class10.1. Assume the HST on $36,000 is $4,680. Your capital cost is $40,680($36,000+$4,680). You enter $40,680in column3.

There is a limit on the capital cost of a Class10.1 vehicle you buy from a person with whom you have a non-arm's length relationship. Generally, such a relationship happens when the person from whom you acquire the vehicle is a relative. A non-arm's length relationship can also happen in certain business relationships.

In this case, the capital cost is the least of the following3 amounts:

  • the fair market value of the vehicle when you acquired it
  • $36,000 plus the GST and PST, or HST, that you would have paid on $36,000 if you had acquired the vehicle in 2023
  • the seller's cost of the vehicle just before you acquired it. The cost can vary depending on what the seller used the vehicle for before you acquired it. If the seller used the vehicle to earn income, the cost will be the UCC of the vehicle just before you acquired it. When the seller was not using the vehicle to earn income, the cost will usually be the original cost of the vehicle
Column4 – Proceeds of disposition in the year

For a Class10.1 vehicle you disposed of in 2023, record the lesser of:

  • the proceeds of disposition of the property minus the related outlays and expenses
  • the capital cost of the vehicle
Column5 – Base amount for capital cost allowance

Base your CCA claim, if any, on the amount in this column.

If you owned the vehicle in 2023 and still owned it at the end of 2023, enter in column 5 the same amount you entered in column 2.

If you acquire a class 10.1 vehicle in 2023 that is not accelerated investment incentive property (AIIP), you can only claim CCA on 50% of the capital cost. This is known as the 50% rule. If you acquired a class 10.1 vehicle in 2023 that is not AIIP and you still owned the vehicle at the end of 2023, enter 50% of the amount in column 3 in column 5.

The 50% rule does not apply to AIIP. If you acquired a class 10.1 vehicle in 2023 that is AIIP and you still owned the vehicle at the end of 2023, enter 1.5 times the amount in column 3 in column 5.

If you acquired and disposed of the same Class 10.1 vehicle in 2023, enter 0 in column 5.

For a Class10.1 vehicle you disposed of in 2023, you may be able to claim 50% of the CCA that would be allowed if you had still owned the vehicle at the end of the year. This is known as the half-year rule on sale.

You can use the half-year rule if you owned, at the end of 2022, the class10.1 vehicle you sold in 2023. If you meet this condition, enter 50% of the amount from column2 in column5.

Column7 – CCA for the year

Claim CCA if you were still using the vehicle for employment at the end of 2023. If you started using a vehicle for employment part way through the year, you can claim CCA on the vehicle for the full year. You do not have to limit your CCA claim to the part of the year that you used the vehicle for employment.

Record the CCA you want to claim for 2023. The most you can claim is 30% of the amount in column5.

Column8 – UCC at the end of the year

Calculate the undepreciated capital cost at the end of 2023 as follows:

  • For a Class10.1 vehicle you owned in 2022 and still owned at the end of 2023, enter the amount you get after you subtract the amount in column7 from the amount in column2
  • For a Class10.1 vehicle you acquired during 2023 and still owned at the end of 2023, enter the amount you get after you subtract the amount in column7 from the amount in column3
  • For a Class10.1 vehicle you disposed of during 2023, enter "nil" in column8. The recapture and terminal loss rules do not apply to a Class10.1 vehicle

Chapter11 – Employee goods and services tax/harmonized sales tax (GST/HST) rebate

New Brunswick, Nova Scotia, Newfoundland and Labrador, Ontario, and Prince Edward Island (PEI)have harmonized their respective provincial sales taxes with theGST to create the harmonized sales tax (HST) in each of these provinces. For the rest of this chapter,the CRArefers to these provinces as the participating provinces.

As an employee, you may have incurred expenses in the course of your employment duties. Some of these expenses you paid may have included GST or HST. If you deducted these expenses from your employment income, you may be able to get a rebate of the GST or HST you paid on these expenses. Complete FormGST370, Employee and Partner GST/HST Rebate Application, and claim the rebate on line45700 of your income tax and benefit return. For more information, read the section called How to complete FormGST370, Employee and Partner GST/HST Rebate Application.

It is important for you to keep proper records to support your claim for a GST/HST rebate. For more information on keeping records, readChapter1 or go to Keeping records.

How a rebate affects your income tax

When you receive a GST/HST rebate for your expenses, you have to include it in your income for the year you received it. Report the amount on line10400of your income tax and benefit return. For example, if in 2023 you received a GST/HST rebate that you claimed for the 2022 tax year, you have to include it on line10400 of your 2023 income tax and benefit return.

If any part of the GST/HST rebate is for a vehicle, an aircraftor a musical instrument you bought, it will affect your claim for capital cost allowance (CCA) in the year you receive the rebate. If this applies to you, reduce the undepreciated capital cost (UCC)of your vehicle, aircraftor musical instrument by the amount of the rebate at the beginning of the year in which you receive the rebate and do not include that part of the rebate on line10400 of your income tax and benefit return. Read the example.

Do you qualify for the rebate?

As an employee, you may qualify for a GST/HST rebate if all of the following conditions apply:

  • You paid GST or HST on certain employment-related expenses and deducted those expenses on your income tax and benefit return
  • Your employer is a GST/HST registrant

You do not qualify for a GST/HST rebate in either of the following situations:

  • Your employer is not a GST/HST registrant
  • Your employer is a listed financial institution as defined in the Excise Tax Act (for example, an entity that was at any time during the year a bank, an investment dealer, a trust company, an insurance company, a credit union, or a corporation whose principal business was lending money)

Expenses that qualify for the rebate

You can only apply for a rebate of the GST or HST you paid on expenses that youcan deducton your income tax and benefit return. You must have paid the GST or HST before claiming the rebate. Common examples of eligible expenses are described in chapters2to 9 of this guide.

Non-eligible expenses

Non-eligible expenses include the following:

  • expenses on which you did not pay GST or HST, such as:
    • goods and services acquired from non-registrants (for example, small suppliers)
    • most expenses you incurred outside Canada (for example, gasoline, accommodation, meals, and entertainment)
    • certain expenses that you do not pay GST or HST on, such as basic groceries
    • expenses that are not subject to GST or HST, includinginsurance premiums, mortgage interest, residential rents, interest, motor vehicle licence and registration fees, and salaries
  • expenses you incurred when your employer was not a GST/HST registrant
  • expenses that relate to an allowance you received from your employer that is not reported inPartC of the GST/HST rebate application - for example, an allowance that was not included in your income as a taxable benefit because it was a reasonable allowance
  • any personal-use part of an eligible expense
  • 50% of the GST/HST paid on eligible expenses for food, beverages, and entertainment (for long-haul truck drivers, 20% of the GST/HST paid on these expenses that were incurred during eligible travel periods)
  • an expense or part of an expense for which you were reimbursed or are entitled to be reimbursed by your employer

Capital cost allowance (CCA)

You can claim a GST/HST rebate based on the amount of CCA you claimed on motor vehicles, aircrafts and musical instruments on which you paid GST or HST. If you claim CCA on more than one property of the same class, you have to separate the part of the CCA for the property that qualifies for the rebate from the CCA for the other properties.

In most cases, you cannot claim a GST/HST rebate based on the CCA claimed on motor vehicles, aircrafts and musical instruments that relates to any allowance your employer paid you on those properties. However, you can claim a rebate if it relates to an allowance your employer reports inPartC of FormGST370. You cannot claim a rebate based on the CCA claimed on property for which you received a non-taxable allowance.

If you paid GST when you bought your motor vehicle, aircraftor musical instrument, you can claim a rebate of 5/105 of the CCA you claimed on your income tax and benefit return. If you paid HST, you can claim a rebate of 13/113or 15/115 of the CCA you claimed on your income tax and benefit return, depending on which HST rate applied to the purchase.

In certain cases, you may have to do an additional calculation if you bought your motor vehicle, aircraftor musical instrument in one province and brought the property into a participating province. For more information, read the section called Situation5 - Property and services brought into a participating province.

Filing deadline

You should file your FormGST370, Employee and Partner GST/HST Rebate Application, with your income tax and benefit return for the year in which you deduct the expenses.

If you do not file your rebate application with your income tax and benefit return, send it along with a letter to your tax centre. Include details such as your social insurance number and the tax year to which the application relates.To find your tax centre address,go toFind a CRA address. You can also call the CRA at1-800-959-8281.

You have up to four years from the end of the year to which the expenses relate to file an application for a GST/HST rebate.

Rebate restriction

You can only file one Form GST370, Employee and Partner GST/HST Rebate Application for each calendar year.

You cannot get a rebate of an amount if any of the following apply:

  • The CRApreviously refunded, remitted, or credited the tax to you
  • You received or are entitled to receive a rebate, refund, or remission under any other section of the Excise Tax Act or any other act of Parliament for the same expense
  • You received a credit note, or you issued a debit note, for an adjustment, refund, or credit that includes the amount
  • The deadline for filing the rebate has passed

Overpayment of a rebate

If you receive an overpayment of a GST/HST rebate, you have to repay the excess.The CRAcharges interest on any balance you owe.

How to complete Form GST370, Employee and Partner GST/HST Rebate Application

You must completepartsA, B, andD of FormGST370. If applicable, your employer has to completePart C (for more information readPart C – Declaration by claimant's employer). Use a separate form for each tax year.

PartA – Identification

The tax year of claim should be the same year as the income tax and benefit return for which you are claiming the GST/HST rebate.

PartB – Rebate calculation

Calculate your rebate based on the expenses you deducted on your income tax and benefit return. These expenses include GST and PST, or HST, and tips (if the supplierincluded the tip in your bill).

For eligible expenses on which you paid GST, you can claim a rebate of 5/105 of those expenses. For eligible expenseson which you paid HST, you can claim a rebate of 13/113or 15/115 of those expenses, depending on which HST rate applied to the purchase.

In certain cases, you may have to do an additional calculation if you bought property and services in one province and brought them into a participating province. For more information, read the section called Situation5 – Property and services brought into a participating province.

Refer to the following situations to determine how to calculate your rebate based on your particular case. When you calculate your rebate, use only the expenses deducted on your income tax and benefit return.

Situation 1 – The only expenses you deducted are union, professional, or similar dues

Not all union, professional, or similar dues that you claimed on line21200 of your income tax and benefit return are subject to GST/HST. Your receipt for these dues should show whether GST/HST was charged. If these dues are the only expense you deducted, do not complete the charts on pages 4 and 5 of the form.

If you paid GST, enter on lines1 and3 ofPartB the amount of the expense including the GST minus any amount you were reimbursed. Multiply the amount on line3 by5/105 and enter the result on line4.

If you paid HST, enter in column 3B, and/or 3C of lines 5 and 7 of Part B the amount of the expense including the HST minus any amount you were directly reimbursed. Add the amounts from columns 3B, and 3C of line 7, and enter the total on line 8. Multiply the amounts from columns 3B, and 3C of line 7 by the corresponding fraction (13/113, and/or 15/115) and enter the results on lines 9 or 10 respectively. Finally, add the amounts from lines 9, and 10 and enter the result on line 11.

Note

Columns 3B and 3C represent the HST rates for the participating provinces applicable to your situation.

Add lines 4 and 11, and enter the result on line 14. The amount on line 14is your total rebate claim. Enter this amount on line 45700 of your income tax and benefit return. Do not forget to completePart D.

Situation 2 – You deducted only GST expenses

Before completingPart B, complete Chart 1 and Chart 2 (if applicable) on pages 4 and 5of the form to determine your total expenses that are eligible for the GST rebate.

Enter in column1A of Chart1 the employment expenses you deducted on your income tax and benefit return. You calculated these amounts on FormT777, Statement of Employment Expenses, or on FormTL2, Claim for Meals and Lodging Expenses.

Also, if applicable, enter in column1A of Chart1 the union, professional, or similar dues you claimed on line21200 of your income tax and benefit return and on which you paid GST. Your receipt for these dues should show whether GST was charged.

Do not enter any amount in the black areas of Chart 1, since these expenses are not eligible for the rebate.

Enter in column2A of Chart 1 the amount of any expenses included in column1A that is not eligible for the rebate. Refer to list of non-eligible expenses. For each expense, subtract the amount in column2A from the amount in column1A. Enter the result in column3A. Total the expenses in column3A, and enter the result inthe "Total eligible expenses" boxof column3A.

If you deducted CCA for a motor vehicle, an aircraftor a musical instrument on which you paid GST, enter the total amount of this CCA in column 1A of Chart 2. If you claimed CCA for a motor vehicle, an aircraft, or a musical instrument, subtract any non-eligible CCA in column 2A from your total CCA in column 1A. Enter the result in column 3A.

Copy the "Total eligible expenses" amount from column 3A of Chart 1 and column 3A of Chart 2 to lines 1 and 2 respectively ofPart B on the front of the form. Add line 1 and line 2 inPart B, and enter the result on line 3. Multiply line 3 by 5/105, and enter the result on line 4.

Copy the amount from line 4 to line 14. This is your total rebate claim. Enter this amount on line 45700 of your income tax and benefit return. Do not forget to complete Part D.

Situation 3 – You deducted only HST expenses

Before completingPart B, complete Chart 1 and Chart 2 (if applicable) on pages 4 and 5 of the form to determine your total expenses that are eligible for the HST rebate.

Enter in column 1B and/or 1C of Chart 1 (depending on the HST rate(s) applicable to you) the employment expenses you deducted on your income tax and benefit return. You calculated these amounts on FormT777, Statement of Employment Expenses, or on FormTL2, Claim for Meals and Lodging Expenses.

Also, if applicable, enter in column 1B and/or 1C of Chart 1 the union, professional, or similar dues you claimed on line 21200 of your income tax and benefit return, and for which you paid HST. Your receipt for these dues should show whether HST was charged.

Do not enter any amount in the black areas of Chart 1, since these expenses are not eligible for the rebate.

Enter in column 2B and/or 2C of Chart 1 the part of any expenses included in the applicable box of column 1 of Chart 1 that is not eligible for the rebate.Refer to list ofnon-eligible expenses.For each expense, subtract the amount in column 2 from the corresponding amount in column 1. Enter the result in column 3B and/or 3C of Chart 1, as applicable. Total the expenses in column 3B and/or 3C, and enter the result(s) in the appropriate “Total eligible expenses” box(es) of column 3 of Chart 1.

If you deducted CCA for a motor vehicle, an aircraft or a musical instrument on which you paid HST, enter the total amount of this CCA in column 1B and/or 1C of Chart 2. If you claimed CCA for a motor vehicle, aircraft, or musical instrument, subtract any non eligible CCA in column 2B and/or 2C as applicable from your total CCA in the corresponding row of column 1. Enter the result in column 3B and/or 3C of Chart 2, as applicable.

Copy the “Total eligible expenses” amount from column 3B and/or 3C of Chart 1 to column 3B and/or 3C of line 5 (depending on the HST rates applicable to your situation) of Part B on page 2 of the form. Copy the amount from column 3B and/or 3C of Chart 2 to column 3B and/or 3C of line 6 (depending on the HST rates that apply to your situation) of Part B on page 2 of the form. Add columns 3B, and/or 3C of line 5 and line 6 of Part B, and enter the results on the corresponding columns of line 7. Add the totals from the applicable columns on line 7, and enter the result on line 8.

Multiply column 3B of line 7 by 13/113, and enter the result on line 9. Multiply column 3C of line 7 by 15/115 and enter the result on line 10. Total lines 9, and 10, and enter the result on line 11.

If Situation5does not apply to you, copy the amount from line 11 to line 14. This is your total rebate claim. Enter this amount on line 45700 of your income tax and benefit return. Do not forget to completePart D.

Situation 4 – You deducted both GST and HST expenses

Before completingPart B, complete Chart 1 and Chart 2 (if applicable) on pages 4 and 5 of the form to determine the total expenses that are eligible for the GST and HST rebate.

You calculated your employment expenses using FormT777, Statement of Employment Expenses, or FormTL2, Claim for Meals and Lodging Expenses. Separate the expenses on which you paid GST from those expenses on which you paid HST. Enter the GST expenses in column 1A of Chart 1, and the HST expenses in column 1Band/or 1C (depending on the HST rate(s) applicable to you) of Chart 1.

Also, if applicable, enter in column 1A, 1B, and/or 1C of Chart 1 the union, professional, or similar dues that you claimed on line 21200 of your income tax and benefit return and on which you paid the GST or HST. Your receipt for these dues should show whether GST or HST was charged.

Do not enter any amount in the black areas, since these expenses are not eligible for the rebate.

Enter in column 2A, 2B, and/or 2C of Chart 1 the part of any expenses included in the applicable box of column 1 that is not eligible for the rebate.Refer to list ofnon-eligible expenses. For each expense, subtract the amount in column 2 from the corresponding amount in column 1. Enter the result in column 3A, 3B, and/or 3C of Chart1as applicable. Total the expenses in column 3A, 3B, and/or 3C, and enter the result(s) in the appropriate "Total eligible expenses" box(es) of column 3 of Chart1.

If you deducted CCA for a motor vehicle, an aircraftor a musical instrument on which you paid the GST/HST, enter the total amount of the CCA in column 1A, 1B, and/or 1C of Chart 2. If you claimed CCA for a motor vehicle, an aircraft, or a musical instrument, subtract any non-eligible CCA in column 2A, 2B, and/or 2C as applicable from your total CCA in the corresponding row of column 1 (read example). Enter the result in column 3A, 3B, and/or 3C of Chart2, as applicable.

Copy the "Total eligible expense" amount from column 3A of Chart 1 and column 3A of Chart 2 to lines 1 and 2 respectively ofPart B on page 1 of the form. Add line 1 and line 2 inPart B, and enter the result on line 3. Multiply line 3 by 5/105, and enter the result on line 4.

Copy the “Total eligible expenses” amount from column 3B and/or 3C of Chart 1 to column 3B and/or 3C of line 5 (depending on the HST rates applicable to your situation) of Part B on page 2 of the form. Copy the amount from column 3B and/or 3C of Chart 2 to column 3B and/or 3C of line 6 (depending on the HST rates that apply to your situation) of Part B on page 2 of the form. Add columns 3B, and 3C, of line 5 and line 6 of Part B, and enter the results on the corresponding columns of line 7. Add the totals from the applicable columns on line 7, and enter the result on line 8.

Multiply column 3B of line 7 by 13/113, and enter the result on line 9. Multiply column 3C of line 7 by 15/115, and enter the result on line 10. Total lines 9, and 10, and enter the result on line 11.

If Situation 5 described below does not apply to you, add lines 4 and 11, and enter the result on line 14. This is your total rebate claim. Enter this amount on line 45700 of your income tax and benefit return. Do not forget to complete Part D.

Situation 5 – Property and services brought into a participating province

You may be eligible to claim a rebate of 1/101, 2/102, 8/108, or 10/110 for eligible expenses deducted on your income tax and benefit return for which you paid all or part of the applicable provincial part of HST separately. You may have paid all or part of the applicable provincial part of HST separately in the following situations:

  • Youpurchased goods ina non-participatingprovince and brought them into a participating province
  • You purchased goods in a participating province and brought them into another participating province for which the rate of HST is higher
  • You imported commercial goods from outside Canada into a participating province
  • You had goods delivered or made available to you in a participating province, or sent by mail or courier to you at an address in a participating province from a non-registered non-resident of Canada

If Situation 5 applies to you complete Chart 3. If you need help, callCRA's business enquiries line at 1-800-959-5525.

Situation 6 – The only expenses you deducted are tradesperson's tools expenses and/or apprentice mechanic tools expenses

If the only expenses you claimed on line22900 of your income tax and benefit return were for the cost of tools bought as a tradesperson and/or an apprentice mechanic (readChapter7), and neither Situation 4 nor Situation 5 applies to you, do not complete the charts on pages 4 and 5 of FormGST370.

If you paid GST, enter on lines 1 and 3 ofPart B the amount of the expense you claimed on line 22900 of your income tax and benefit return, including the GST minus any amount you were reimbursed.Multiply the amount on line 3 by 5/105, and enter the result on line 4.

If you paid HST, enter in column 3B, and/or 3C of lines 5 and 7 of Part B the amount of the expense minus any amount you were directly reimbursed. Add the amounts from columns 3B, and/or 3C of line 7, and enter the total on line 8. Multiply the amounts from columns3B, and/or 3C of line 7 by the corresponding fraction (13/113 or 15/115) and enter the results on lines 9, and 10 respectively. Finally, add the amounts from lines 9, and 10, and enter the result on line 11.

Note

Columns 3B and 3C represent the HST rates for the participating provinces applicable to your situation.

Add lines 4 and 11, and enter the result on line 14. The amount on line 14is your total rebate claim. Enter this amount on line 45700 of your income tax and benefit return. Do not forget to completePart D.

PartC – Declaration by claimant's employer

You may want to claim a rebate for expenses that relate to a taxable allowance. A taxable allowance will be included in box40 of your T4slip. If so, your employer or an authorized officer has to completePartC. An authorized officer includes an immediate supervisor, controller, or office manager.

You cannot claim a rebate for expenses for which you received a non-taxable allowance. A non-taxable allowance is an allowance that was considered reasonable when it was paid.

Note

Since you can only file one Form GST370 per calendar year, in the event that your claim relates to expenses incurred from more than one employer, you will need to attach a letter to the form from any additional employers certifying the expenses relating to them.

PartD – Certification

Sign the certification area. If you don't, it may delay or invalidate your GST/HST rebate claim.

After completing your rebate application

After completing FormGST370, attach a copy to your income tax and benefit return, and enter the amount of your claim on line45700 of your income tax and benefit return. Keep a copy of the completed form for your records.

Quebec sales tax rebate

Some of the expenses you paid to earn your employment income may have included Quebec sales tax (QST). If you deducted these expenses from your employment income, you may be able to receive a rebate of the QST you paid. This rebate also applies to the QST you paid on a musical instrument that you use to earn employment income. Claim the QST rebate on line459 of your Quebec provincial income tax return.

If the QST rebate is for your employment expenses, include the rebate in your income for the year you received it. Report the amount on line10400 of your federal income tax and benefit return.

If the QST rebate is for a vehicle or musical instrument you bought, it will affect your claim for capital cost allowance in the year you receive the rebate. If this applies to you, reduce the undepreciated capital cost of your vehicle or musical instrument at the beginning of the year by the amount of the rebate. Do not include the rebate on line10400 of your federal income tax and benefit return.

For more information about the QST rebate and FormVD-358-V, Québec Sales Tax Rebate for Employees and Partners, contact Revenu Québec.

Example

Sam is a commissioned salesperson who negotiates contracts for his employer in Ontario which has an HST rate of 13%. Under his contract of employment, he has to pay his own expenses and is normally required to work away from his employer's place of business. His employer is a GST/HST registrant. Sam received a taxable allowance for the use of his motor vehicle (purchased in December of 2022) that is included on his T4 slip for 2023. Since the allowance is taxable, he can claim a rebate on certain expenses related to that allowance. His travel for work is restricted to Ontario and all of his expenses are incurred within the province.

To calculate his employment expenses, he completed FormT777, Statement of Employment Expenses, as shown in this sample T777. Because of space limitations the entire form is not reproduced.

Sam is now ready to calculate his GST/HST rebate. To claim the rebate, he has to complete FormGST370, Employee and Partner GST/HST Rebate Application. Sam completesPart A. Before he can completePart B, he has to complete Chart1 of FormGST370 to calculate his HST eligible expenses. He also must complete Chart2 because he is claiming CCA on his motor vehicle. Using the information in this guide, he calculates and reports the expenses not eligible for the rebate in column 2B of Chart 1. To calculate the personal-use portion of his motor vehicle expenses, Sam uses the fraction7,500/30,000. This is the personal kilometres driven (30,000− 22,500) over the total kilometres driven. He enters this non-eligible portion of CCA in column 2B of Chart 2. He completes Chart 1 and Chart 2 on his Form GST370.

Sam did not enter any amounts in the black areas, since these expenses are not eligible for the rebate.

Sam copies the amounts from the "Total eligible expenses" lines of column 3B of Chart1 to column 3B of line 5 in PartB of FormGST370, and column 3B of Chart 2 to column 3B of line 6 inPart B, and completes it as follows:

PartB – Rebate calculation

Since Sam is claiming a rebate for his motor vehicle expenses for which he received a taxable allowance, an authorized officer of Sam's employer has to complete and signPart C.

Sam enters $1,254.17 on line 45700 of his 2023 income tax and benefit return. He also attaches FormGST370 to his tax return.

On his 2024 income tax and benefit return, Sam will include $508.29 ($4,418.25 x [13/113]) on line 10400. This amount is the part of the rebate he will receive in 2024 that relates to eligible expenses other than CCA. He will then reduce hisUCC at the beginning of 2024 by $745.87 ($6,483.37 x [13/113]).

References

To get thefollowing publications go toForms and publicationsorcall 1-800-959-8281.

Consolidated and archived Interpretation bulletins

Income Tax Folio

For more information

If you need help

If you needmore informationafter reading this guide, go to Taxesor call 1-800-959-8281.

Forms and publications

The CRA encourages you to file your return electronically. If you need a paper version of our forms and publications, go to Forms and publications or call 1-800-959-8281.

Digital services for individuals

The CRA's digital services are fast, easy, and secure!

My Account

My Account lets you view and manage your personal income tax and benefit information online. Find out how to register at My Account for Individuals.

Use My Account throughout the year to:

  • view your benefit and credit information and apply for certain benefits
  • view your notice of assessment or reassessment
  • view uncashed cheques and request a replacement payment
  • change your address, phone numbers, direct deposit information, marital status, and information about children in your care
  • manage notification preferences andreceiveemail notificationswhen important changes are made to youraccount
  • check your tax-free savings account (TFSA) contribution room and registered retirement savings plan (RRSP) deduction limit
  • track the progress of certain files you have submitted to the CRA
  • make a payment online to the CRA with the My Payment service, create a pre-authorized debit (PAD) agreement, or create a QR code to pay in person at Canada Post for a fee. For more information on how to make a payment, go toPayments to the CRA
  • view and printyour proof of income statement
  • manage authorized representatives and authorization requests
  • submit documents to the CRA
  • submit an audit enquiry
  • link between your CRA My Account and Employment and Social Development Canada (ESDC) My Service Canada Account
  • manage multi-factor authentication settings

To sign in to or register for the CRA's digital services, go to:

Receive your CRA mail online

Set your correspondence preference to “Electronic mail” to receive email notifications when CRA mail, like your notice of assessment, is available in your account.

For more information, go to email notifications from the CRA.

Tax Information Phone Service (TIPS)

For tax information by telephone, use the CRA’s automated service, TIPS, by calling 1-800-267-6999.

Teletypewriter (TTY) users

If you use a TTY for a hearing or speech impairment, call 1-800-665-0354.

If you use an operator-assisted relay service, callour regular telephone numbers instead of the TTY number.

Formal disputes (objections and appeals)

You have the right to file an objection if you disagree with an assessment, determination, or decision.

For more information about objections and related deadlines, go toObjections, appeals, disputes, and relief measures.

CRA service feedback program

Service complaints

You can expect to be treated fairly under clear and established rules, and get a high level of service each time you deal with the Canada Revenue Agency (CRA). For more information, see the Taxpayer Bill of Rights.

You may provide compliments or suggestions, and if you are not satisfied with the service you received:

  1. Try to resolve the matter with the employee you have been dealing with or call the telephone number provided in the correspondence you received from the CRA. If you do not have contact information for the CRA, go toContact the Canada Revenue Agency.
  2. If you have not been able to resolve your service-related issue, you can ask to discuss the matter with the employee’s supervisor.
  3. If the problem is still not resolved, you can file a service‑related complaint by filling outForm RC193, Service Feedback. For more information and to learn how to file a complaint, go toSubmit service feedback.

If you are not satisfied with how the CRA has handled your service-related complaint, you can submit a complaint to the Office of the Taxpayers’ Ombudsperson.

Reprisal complaints

If you have received a response regarding a previously submitted service complaint or a formal review of a CRA decision and feel you were not treated impartially by a CRA employee, you can submit a reprisal complaint by filling out FormRC459, Reprisal Complaint.

For more information, go to Objections, appeals, disputes, and relief measures.

Page details

Date modified:
Employment Expenses 2023 - Canada.ca (2024)

FAQs

What is the employment amount for 2023 in Canada? ›

New for 2023

the combined amount of the increased deduction for tradespeople's tool expenses ($1,000) and the Canada employment amount ($1,368 in 2023)

Can I write off work expenses 2023? ›

However, with tax reform, all miscellaneous “2%” expenses, including unreimbursed employee expenses are not allowed between 2018 and 2025. Expenses such as union dues, work-related business travel, or professional organization dues are no longer deductible, even if the employee can itemize deductions.

What is the personal deduction for 2023 Canada? ›

In addition, the maximum BPA will be increased to $15,000 by 2023 as follows: $13,808 for the 2021 taxation year, $14,398 for the 2022 taxation year, and. $15,000 for the 2023 taxation year, and indexed for inflation for subsequent years.

What is the payroll tax rate in Canada in 2023? ›

What is the average employee tax rate in Canada?
Taxable Income (CAD)Tax rateTax Brackets
50,197 – 100,39220.5%on the next $50,195
100,392 – 155,62526%on the next $55,233
155,625 – 221,70829%on the next $66,083
221,708+33%on income above $221,708
1 more row

What is the Canada employment amount? ›

The Canada employment amount is a non-refundable tax credit that you can claim if you reported employment income for the year. This amount is designed to help Canadians with some of their work-related expenses such as uniforms, home computers, and supplies needed to work.

What is the Canada employment amount for Canada tax? ›

Canada Employment Credit – Federal

The Canada Employment Credit is a non-refundable tax credit equal to 15% of the lesser of $1,36836 or the employee's employment income. Amount for 2023, indexed annually.

What work expenses can I claim? ›

Find out which expenses you can claim as income tax deductions and work out the amount to claim.
  • How to claim deductions. ...
  • Cars, transport and travel. ...
  • Tools, computers and items you use for work. ...
  • Clothes and items you wear at work. ...
  • Working from home expenses. ...
  • Education, training and seminars.

What employee expenses are tax deductible? ›

You can deduct only unreimbursed employee expenses that are paid or incurred during your tax year, for carrying on your trade or business of being an employee, and ordinary and necessary. An expense is ordinary if it is common and accepted in your trade, business, or profession.

What expenses can be itemized in 2023? ›

If you itemize, you can deduct a part of your medical and dental expenses, and amounts you paid for certain taxes, interest, contributions, and other expenses.

What expenses are tax deductible in Canada? ›

Claiming deductions, credits, and expenses
  • Disability tax credit.
  • Medical expenses.
  • Moving expenses.
  • Digital news subscription expenses.
  • Home office expenses for employees.
  • Canada training credit.
Mar 15, 2024

Can I claim work clothes on my taxes in Canada? ›

You can't deduct a police background check or work clothes (uniforms etc.) required for your job. However, if you had employment income during the year you can claim the Canada Employment Amount, which could help you offset some of the cost.

Can I claim utilities on my taxes in Canada? ›

You can deduct expenses for utilities, such as gas, oil, electricity, water and cable, if your rental arrangement specifies that you pay for the utilities of your rental space or units.

Will Canada payroll taxes go up in 2023? ›

Payroll taxes have increased in 2023, and are likely to increase for 2024 as well.

Why are bonuses taxed so high in Canada? ›

Bonuses are considered “supplemental income,” which simply means money you earn over and above your regular paycheque. In Canada, this supplemental income is subject to income tax, just like your regular salary. In other words, your regular salary and your bonus are subject to the exact same amount and type of tax.

What deductions are taken from a paycheck in Ontario? ›

What deductions are taken from a pay cheque in Ontario? In Ontario, the most common types of wage deductions are taxes, Canada Pension Plan (CPP) contributions, and Employment Insurance (EI) premiums.

What is the Ontario Basic Personal Amount for 2023? ›

The federal basic personal amount comprises two elements: the base amount ($13,520 for 2023) and an additional amount ($1,480 for 2023). The additional amount is reduced for individuals with net income in excess of $165,430 and is fully eliminated for individuals with net income in excess of $235,675.

How many people are employed in the US in 2023? ›

In 2023, about 134.06 million people were employed in the United States on a full-time basis, returning to pre-pandemic levels.

How to apply for Canada employment amount? ›

You can apply for the credit when you file your taxes by filing out the Canada employment amount on line 363 of the Schedule 1 federal tax form. Self-employed individuals are not eligible for this credit.

How much is employment tax in Ontario? ›

The tax rates in Ontario range from 5.05% to 13.16% of income and the combined federal and provincial tax rate is between 20.05% and 53.53%.

References

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