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employment deductions

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Employment Deductions

3,300 Deductions from Employment Income

The Act specifically limits deductions from employment income to those specified in section 8

3,310 Sales/Negotiating Person's Expenses

There are many individuals who earn their living selling goods or services in return for commission income

The income tax issues revolve around the deductibility of the expenses that they incur to earn this commission income

Expenses incurred for the purpose of earning income from employment for employees who sell property or negotiate contracts may also be deductible. The nature or type of the expenses is not restricted except for expenses of a capital nature

These expenditures are subject to the general restrictions and a number of specific restriction and/or exceptions: Expenditures in respect of the use of a yacht, camp, lodge, golf course, and membership fees in private clubs are not deductible

Also not deductible are payments to reimburse the employer for the personal use of an employer provided automobile, since these payments reduce the previously-included benefit

The amount of expenses that can be deducted is limited to the amount of the employee's commission income or other amounts, that are fixed by reference to the volume of sales or contracts negotiated

Note the conditions in the provision that must be met for the expenses to be deductible: The employee must be required to pay his or her own expenses as stipulated in the contract of employment The employee must be ordinarily required to carry on the duties of employment away from the employer's place of business The remuneration must be dependent on volume of sales or contracts A non-taxable travel allowance cannot be received. Note, a travel allowance does not include an automobile allowance

If the travel allowance is not reasonable, then the sales/negotiating person must include the allowance in income An unreasonable allowance is one that is less than a reasonable...