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 amount, greater than a reasonable amount, or deemed not to be reasonable

3,320 Any Employee's Travelling Expenses Other Than Motor Vehicle Expenses

Overview
The travelling expenses of employees who are not involved in the selling of property or negotiating of contracts are deductible under one of two provisions: Paragraph 8(1)(h) -- Travelling expenses other than motor vehicle expenses Paragraph 8(1)(h.1) -- Motor vehicle expenses (discussed later in this chapter) Deductible travelling expenses are not restricted as to type of employee or employer

Conditions
First condition -- Employee must ordinarily be required to carry out his or her duties away from his or her employer's place of business Second condition -- Requires that the payment of the travelling expenses by the employee must be part of his or her contract Contract can be either written or oral

Third condition -- The employee cannot be in receipt of a tax-exempt allowance for travelling expenses, which exclude the allowance if it is reasonable Employees who have received an allowance that is greater or less than a reasonable amount can include the allowance in income and can deduct the related expenses, because they would not be in receipt of an excluded (reasonable) allowance in such circumstances Note that the receipt of an excluded allowance for employment use of a motor vehicle precludes the deduction of motor vehicle expenses, but does not preclude the deduction of more general travelling expenses The receipt of an excluded (reasonable) allowance for one type of travelling expenses does not preclude the deduction of the other type of travelling expenses

Limitations
The deductions of the cost of meals consumed while travelling for an employer is restricted, are only deductible where there meal is consumed when the taxpayer is away for 12 hours or more, from the municipality or metropolitan area where he or she usually reports for work The deduction for the cost of meals consumed and...
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