Employment Expenses in Canada: What Employees Can Claim on Their Tax Return

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Employment Expenses in Canada – Employee Tax Deductions

Employment expenses in Canada employees tax deductions
Employees may be able to deduct certain work-related expenses if CRA conditions are met.


Many Canadian employees don’t realize they may be able to deduct certain employment expenses on their personal tax return. When claimed correctly, these deductions can reduce your taxable income and lower the amount of tax you owe.

However, employment expenses are not automatic. The rules are strict, documentation is required, and eligibility depends on your job duties and how you are paid.

This guide explains the basics of employment expenses in Canada, based on rules from the
Canada Revenue Agency (CRA).


What Are Employment Expenses?

Employment expenses are out-of-pocket costs that employees are required to pay to earn employment income and are not reimbursed by their employer.

Examples may include:

  • Work supplies

  • Vehicle expenses

  • Home office costs

  • Meals (in limited situations)

  • Professional fees

To claim these expenses, you must meet CRA conditions and have the proper documentation.


Who Is Eligible to Claim Employment Expenses?

You may be eligible to claim employment expenses only if all of the following apply:

  • Your employer required you to pay for certain expenses as part of your job

  • You were not fully reimbursed

  • Your employer completed and signed Form T2200 – Declaration of Conditions of Employment

  • The expenses were directly related to earning your employment income

❗ No T2200 = no employment expense claim, even if the expense feels work-related.


Keeping Records for Employment Expenses

The CRA expects detailed records to support every employment expense claimed.

You should keep:

  • Receipts and invoices (paper or digital)

  • A signed T2200

  • Mileage logs (for vehicle expenses)

  • Home workspace measurements

  • Employment contracts or written employer policies

🗂️ Records must be kept for at least six years after the end of the tax year.


Salaried Employees vs Commission Employees

Employment expense rules differ depending on how you earn your income.

Salaried Employees

  • Deduction options are more limited

  • Many expenses are allowed only under specific conditions

  • Meals, vehicle, and home office claims are closely reviewed by the CRA

Commission Employees

  • Earn income partly or entirely from commissions

  • Often required to cover more costs to earn income

  • May deduct a broader range of employment expenses

Both types of employees must still meet CRA rules and have a valid T2200.


Common Employment Expenses (CRA Overview)

The table below provides a high-level comparison of common employment expenses. Eligibility depends on your job duties, employer requirements, and documentation.

Employment ExpenseSalaried EmployeeCommissioned Employee
Work supplies (paper, stationery, tools)✔️ Yes✔️ Yes
Cell phone (business portion only)✔️ Yes – conditions apply✔️ Yes
Home office expenses✔️ Yes – conditions apply✔️ Yes
Meals (employment-related)✔️ Yes – 50% limit, specific conditions✔️ Yes – 50% limit
Entertainment❌ No✔️ Yes – 50% limit
Motor vehicle expenses✔️ Yes – conditions apply✔️ Yes
Parking (employment-related)✔️ Yes – conditions apply✔️ Yes
Accounting or legal fees✔️ Yes – limited types only✔️ Yes – broader range allowed
Advertising & promotion❌ No✔️ Yes

✔️ = Potentially deductible
❌ = Not deductible

Important Clarifications

  • Meals and entertainment are different

    • Salaried employees may deduct meals only, at 50%, and only in specific work-related situations

    • Entertainment expenses are not deductible for salaried employees

  • Accounting and legal fees

    • Both salaried and commissioned employees may deduct certain fees

    • Commissioned employees generally have more allowable fee types


Working From Home: Employment Expense Overview

If your employer requires you to work from home, you may be able to deduct part of your household expenses, such as:

  • Electricity and heat

  • Internet

  • Rent (not mortgage principal)

Your workspace must be:

  • Your principal place of work, or

  • Used only for work and on a regular basis to meet clients or customers

📌 This topic is covered in detail in a separate post.


Motor Vehicle Expenses for Employees (Overview)

Some employees are required to use their personal vehicle for work. When eligible, deductible expenses may include:

  • Fuel

  • Insurance

  • Maintenance

  • Lease interest or depreciation

  • Employment-related parking

🚗 A detailed mileage log is mandatory.

📌 Motor vehicle expenses are complex and deserve a dedicated guide.

Employment Expenses by Occupation (Coming Soon)

Some occupations have special CRA rules for employment expenses. Separate posts will cover:

  • Transportation employees

  • Forestry operations workers

  • Artists

  • Tradespersons


Final Thoughts: Claiming Employment Expenses the Right Way

Employment expenses can reduce your tax bill — but only when claimed correctly. The CRA expects:

  • A valid T2200

  • Clear employer requirements

  • Accurate calculations

  • Strong documentation

If you’re unsure whether an expense qualifies, getting clarity before filing can help avoid reassessments later. Book a FREE 15-minute consultation or call us today.


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