Just a quick question for those in the know. My job that I recently started includes using my vehicle for work. While my work does not pay travel expenses (within the city) I was curious if I could keep track of the mileage I use my vehicle for work and claim at least gas expenses on my personal income tax?
I am not a numbered company or a contractor, I am an employee.
I've searched online, but have been having trouble nailing it down between the US and Canada and there seem to be varying thoughts on this.
Just a quick question for those in the know. My job that I recently started includes using my vehicle for work. While my work does not pay travel expenses (within the city) I was curious if I could keep track of the mileage I use my vehicle for work and claim at least gas expenses on my personal income tax?
I am not a numbered company or a contractor, I am an employee.
I've searched online, but have been having trouble nailing it down between the US and Canada and there seem to be varying thoughts on this.
While the simple and correct answer is "no" like the poster above me stated, I feel that you should know why.
You cannot claim your travel/vehicle expenses simply because you are not a company. You cannot try to explain to the government that you are incurring this expenses while trying to make income. The fact is that you are making income for your employer (then your employer pays you), and you should have negotiated with the employer to reimburse your costs as the employer can just expense these. If it is a private company then it would be in their favor as it would lower their net income and lower their taxes.
I have provided an explanation for the "no". Hope this is sufficient.
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You cannot claim your travel/vehicle expenses simply because you are not a company. You cannot try to explain to the government that you are incurring this expenses while trying to make income. The fact is that you are making income for your employer (then your employer pays you), and you should have negotiated with the employer to reimburse your costs as the employer can just expense these. If it is a private company then it would be in their favor as it would lower their net income and lower their taxes.
This is wrong. There are circumstances where an employee can claim vehicle or travel expenses. Moreover it has no bearing on the issue whether the taxpayer is a company or not - if an indivdual runs a business through a sole proprietorship and travel and vehicle expenses are laid out for the purpose of earning income those expenses would be deductible.
The reason you generally can't deduct travel expenses is because s.8(2) of the Tax Act says that no amount may be deducted from a taxpayer's income from office or employment except as expressly permitted under s.8. s.8(1) provides the list of deductions you're allowed. Paragraphs 8(1)(h) and (h.1) provide some travel expense and motor vehicle expense deductions in limited circumstances.
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If you're required to use your vehicle for work and your company signs a T2200 to that effect then you are entitled to deduct your expenses incurred to earn employment income net of any untaxed reimbursements to the extent that they were work related.
Being a company or sole proprietorship is immaterial. This is a very common practice in sales.
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The link that DA supplied in the second post clearly states that you can claim mileage and other costs and doesn't mention anything about being your own company. I will track my KM's and keep gas receipts, etc. and let an accountant figure out the rest. Thanks for the responses.
The link that DA supplied in the second post clearly states that you can claim mileage and other costs and doesn't mention anything about being your own company. I will track my KM's and keep gas receipts, etc. and let an accountant figure out the rest. Thanks for the responses.
Here are the rules:
You can deduct your motor vehicle expenses if 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 motor vehicle expenses.
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.
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 meet the above conditions you can deduction your motor vehicle expenses.
This is thread is the perfect example of why you shouldn't expect much from free advice on an internet forum. Posts 3 and 4 are not correct.
As someone who is a CA, claimed expenses upon receiving a T2200, and has signed off on employees receiving a T2200, I can say that it is definitely possible. Certain forms and pieces of evidence are required, but it's not that difficult.
As with anything surrounding these topics, get proper accounting and legal advice from a trusted professional.
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It's a smaller company and he merely stated that I would be best off being a contractor so I could write everything off. I may go that way yet.
This is going to end well.
Let's put it this way, if you're an employee, be an employee. I'd highly wager you're already flagged in the system as an employee, and flipping to a contractor is going to set off nothing but red flags and end very poorly for you and your employer.
The CRA holds annual update meetings for tax accountants, where they share key areas of concern and where they're going to crack down on returns. This year? They're coming down hard after people that are employees but claiming as contractors, as well as people that are using personal service corps but not declaring them as such. (Oh and with the tax rates/penalties that apply to being deeemed a personal service corp, I wouldn't even want to be one).
^They're doing this because they have changed the rules (circa 2011) on personal service businesses to deny the general rate reduction, with the consequence that a PSB pays tax at roughly the top marginal rate so there's no tax advantage to earning money that way vs. as an individual. The kicker? They didn't do anything to fix integration on dividends paid OUT of a PSB, so the effective tax rate after all is said and done is among the highest in the world. Reassessing people on this basis is like discovering a field of untold riches brought about by completely inequitable legislating! It's absurd.
You can, however, just pay yourself salary out of your PSB to reduce its income to zero and pay the tax in your own hands, which eliminates the purpose of having an intermediary corporation but at least prevents you from being hit over the head with a baseball bat of tax.
I'm not sure what all the hubub is. If I end up creating a numbered company and work for my employer as a contractor and get paid as a contractor, there simply is more I can write off, like using my office at home when I work at home, write off some of the dinner and lunch meetings with clients, etc.
My current employer then pays me as a contractor, I assume all the issues with taxes, etc. but can simply write more off. Not sure why this is a problem. Nothing wrong with running my own numbered company and my employer then "contracting" my services as opposed to me being a full time employee.
Tax Question
