EI And Employment Deductions

by Tax Guy - Burlington Accountant on December 31, 2008 Print This Post Print This Post

Question: “Can I deduct employment expenses from Employment insurance payments? These expenses are home office expenses for a commission salesperson.”

Employment insurance benefits received are considered employment income under subsection 6(1)(f) for the purposes of income tax.  For the purposes of determining whether expenses may be claim depends on the nature of the expenses and the type of income earned.

Commission sales people have a certain level of latitude in deducting employment expenses.  However, there are decisions to make.  A commission sales person may deduct what is termed “salesperson expenses” only against their commissions.  That is to say, that the following expenses may be used to reduce commissions to nil.  The list of expenses includes the following:

  • Advertising and promotional expenses
  • Meals and entertainment
  • Lodging
  • Motor vehicle expenses (excluding capital cost allowance)
  • Parking
  • Workspace at home (excluding interest and capital cost allowance)
  • Supplies
  • Licenses
  • Bonding and insurance
  • Office rent
  • Training costs
  • Office equipment

Again the above only may be claimed against earned commissions and cannot be used to against other employment income such as employment insurance.

The other option it to claim only travel and motor vehicle expenses directly under another provision of the income tax act which allows these expenses to be deducted against all employment income including both commissions and the employment insurance.  Note however, that if deductions for motor vehicle and travel are claimed, then the salesperson expenses cannot also be claimed.  The choice is one or the other.

With respect to the motor vehicle and travel expense deductions, capital cost allowance may be claimed, unlike the salesperson expense claim.

In either case, your employment contract must require you to cover your own expenses and you must receive a T2200 from your employer.

About The Tax Guy...

Dean Paley CGA CFP is a Burlington accountant and financial planner who services individuals and business owners locally, nationally and internationally. Dean has appeared in the National Post, Toronto Star and Metro News.

To find out more, visit Dean's website Dean Paley CGA CFP or connect via Twitter @DeanPaleyCGACFP.

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