What expenses can I claim on my tax return?
As an employee, there is not much you can claim on your Canadian tax return and offset them against your taxes. Generally speaking, you cannot deduct the cost of travel to and from work, or other expenses, such as most tools and clothing. (You may be able to deduct the cost of eligible tools you bought to earn employment income as a tradesperson.)
The full list of deductions and credits can be found >> here << on the homepage of the CRA.If you had expenses then it is recommendable to consult a tax advisor to get you the most tax deductions possible.
To make it easy, for a typical Work and Traveler in Canada, here are the options:
Canada Employment Amount
- The Canada employment amount is offsetting general work-related expenses such as home computers, clothes and small office supplies.
- The employment amount is automatically taken into account as soon as you report employment income in the tax return.
- Self-employed individuals cannot claim this amount.
- It is increasing every year and for 2020 it was $ 1,245. For 2021 at $1,257
- Receipts for proof are not required for this amount.
- Even if you have had several jobs, you can only claim the employment amount once.
Work from Home Expenses for tax years 2020, 2021, 2022 - Simplified flat rate
Employees who worked from home more than 50% of the time over a period of a least four consecutive weeks in 2020, 2021 and 2022 due to the Covid-19 pandemic can claim the home office expenses. More info >> here << on the CRA homepage.
Important info and requirements:
- You worked from home in 2020, 2021, or 2022 due to the COVID-19 pandemic
- You worked more than 50% of the time from home for a period of at least four consecutive weeks in the year (2020, 2021, or 2022)
- Your employer did not reimburse you for all of your home office expenses
- You can claim $2 for each day you worked from home during that period
- The maximum amount that can be claimed is $400 per individual in 2020 and $500 per individual in 2021 and in 2022
- Your employer is not required to complete and sign Form T2200
- You are not required to keep documents to support your claim
Employment Expenses - Detailed method
If your job requires you to pay for your own expenses, for example use your private car or phone for your job, you could claim employment expenses. A lot of information on this topic >> here << on the homepage of the CRA.
Requirements for this tax deduction:
- You need to have these expenses specifically for the job. For no other purpose.
- The employer did not reimburse you for these expenses.
- The employer must fill out the form “T2200 Declaration of Conditions of Employment” and give it to you.
- You must fill out form “T777 Statement of Employment Expenses” which is part of the online tax return. You can find the form >> here << as it lists all your expenses options.
- You need receipts or invoices to prove the expenses.
You can claim medical expenses if they are more than 3% of your total income for the tax year. You can only claim the part of the expense that you have not been and will not be reimbursed for. For example if you had prescriptions from a doctor which were not reimbursed by the health insurance from your home country.
A typical and very high expense are dental expenses, as they are not insured in the provincial health care and have a max. reimbursement amount in the health insurance from your home country.
The “Medical Expenses” are part of the federal non-refundable tax credits. That means only 15% of those expenses can be claimed towards owing taxes. If you don’t have to pay taxes then the medical expenses will not have any impact.
A simplified example with an income of $10,000:
Medical expenses are $200
- Your 3% deductible is $300 ($10,000 x 3%)
- You cannot claim the medical expenses as the deductible is higher.
Medical expenses are $1,000
- Your 3% deductible is $300 ($10,000 x 3%)
- You will claim $700 medical expenses ($1,000 – $300)
- From those remaining $700 you can claim $105 towards taxes owing. ($700 x 15%)
Generally, you can claim moving expenses you paid in the year if the following apply:
- you were a “resident for tax purposes” in Canada. Non-residents cannot claim those expenses.
- you moved to work or to run a business, or you moved to study courses as a full-time student enrolled in a post-secondary program at a university, a college, or another educational institution
- your new home is at least 40 kilometres closer to the new place of work or business than your previous home was
- the move has to be from one place where you ordinarily resided to live in another place where you will ordinarily reside.
- It must be a real home you rent or own. For Work and Travellers, a move from a staff accommodation to another staff accommodation doesn’t count. The same applies to moving from one hotel/hostel/airbnb to another hotel/hostel/airbnb or staff accommodation.
A few examples of typical moving expenses:
- U-Haul rental for moving the household items
- Vehicle expenses like gas for the move
- Meals and accommodation during the move (drive) to the new home
For the vehicle or meal expenses you can choose a detailed method where you need to provide every single receipt or the simplified method with a flat rate.
The flat rate for 2020 for meals is $23/meal, to a maximum of $69/day per person.
The flat rate for vehicle expenses is calculated per exact kilometre and depends on the province where the travel begins. The list can be found >> here <<. For example if you move from Alberta to BC you can deduct $0.47 per exact kilometre to your new place.
A lot more information on this topic >> here << on the homepage of the CRA.
You have to fill out form “Form T1-M, Moving Expenses Deduction”. It is part of the online tax return. If you send in a paper return, you need to print it and send it in with the tax return. You can find the form >> here <<.
Northern Resident Deduction
In recognition of the additional cost of living for those living in remote areas of Canada, the Canada Revenue Agency (CRA) grants special tax deduction, the Northern Resident Deduction.
A lot of information on this topic >> here << on the homepage of the CRA.
- To qualify, you must have lived in a dwelling in a prescribed northern zone (Zone A) or a prescribed intermediate zone (Zone B) for a continuous period of at least 6 consecutive months.
- An “dwelling” is a complete and separate living unit with a kitchen, bathroom, sleeping accommodation and a private entrance. It can be: a house, apartment, RV or other similar place in which a person usually sleeps and eats.
- An apartment also counts if the employer lets you live rent-free and pays the costs.
- A dwelling cannot be: a hostel, hotel room or room in a guesthouse.
The actual deductions that you can claim depend on where you live.
The CRA has identified two different “zones”:
“Northern Zone” or Zone A: You can deduct $11 per day
“Intermediate Zone” or Zone B: You can deduct $5.50 per day
All locations in the Yukon, Nunavut and the Northwest Territories are in Zone A.
For the Northern Resident Reduction you have to fill out the form “T2222 Northern Residents Deductions”, where you have to enter the period and your residential address from the north. It is part of the online tax return. If you send in a paper return, you need to print it and send it in with the tax return. You can find the form >> here <<.
What about expenses for self employed?
If you were self employed (contractor or freelancer) then there are many more expenses you can claim from the self employment income.
Unfortunately this is a very complicated topic and it is recommendable to talk to a tax accountant.
If you were a sole proprietor the self employment income will be reported on your personal tax return. You have to fill out form “T2125 Statement of Business or Professional Activities” to report income and expenses.