Work Income and Deductions Glossary
Master the language of employment income & deductions with this easy-to-navigate A–Z reference
- Allowance – A flat amount paid by an employer to cover work-related expenses, such as travel or car usage, which may be taxable or deductible depending on context.
- Annual License or Certification Fees – Fully deductible costs for credentials required to maintain employment in a licensed or regulated role.
- Apprentice Mechanics’ Tools Deduction – A special CRA deduction for eligible tradespeople who purchase tools necessary for their job.
- Association Fees – Payments made to professional or trade organizations; only deductible if required for employment or licensing.
- Bonus Income – Compensation paid beyond salary or wages, often tied to performance or milestones, and considered taxable employment income.
- Business-Use Portion – The portion of a personal expense (e.g., phone, internet, vehicle) that is directly related to work duties and eligible for deduction.
- Capital Asset – A long-term property or item used to earn income, such as vehicles, equipment, or buildings, which must be depreciated over time for tax purposes.
- Capital Cost Allowance (CCA) – The tax deduction that allows you to gradually write off the cost of a capital asset over time according to prescribed rates.
- CCA Class – A CRA-defined category for capital assets, each with a specific depreciation rate (e.g., Class 10 for vehicles, Class 50 for computers).
- Cell Phone and Internet Expenses – Partially deductible work-use portion of phone or internet bills if required by the employer.
- College of Nurses / College of Teachers – Examples of provincial regulatory bodies whose mandatory dues are typically deductible.
- Commission Income – Earnings based on sales or performance metrics, reported as taxable employment income and may affect deduction eligibility.
- Commissioned Sales Employee – An employee earning income primarily from commissions; eligible for additional employment expense deductions.
- CRA Eligibility Criteria (for Deductions) – The set of conditions that must be met for an employment expense to be deductible (e.g., unreimbursed, required by employer, work-related).
- Deduction Timing Strategy – The practice of choosing when to claim eligible expenses based on income patterns to maximize tax savings.
- Deductible Employment Expenses – Specific work-related costs that employees can subtract from taxable income if CRA conditions are met.
- Depreciable Property – Assets that decline in value over time and are eligible for deduction under the CCA system.
- Detailed Method (Home Office Deduction) – CRA-approved method requiring receipts and a T2200 form to claim a percentage of home expenses used for work.
- Director’s Fees – Payments to individuals for serving on a board of directors, considered taxable employment income.
- Documentation Requirements (CRA) – The evidence (receipts, logs, signed forms) needed to support a claim for employment expenses on a tax return.
- Expense Category (CRA) – A classification used by the CRA to determine which employment expenses are deductible and under what conditions.
- Expense Tracking Log – A tool or method (e.g., mileage logbook or phone usage summary) used to support claims for variable or mixed-use expenses.
- Flat Rate Method (Home Office Deduction) – A simplified home office deduction of $2/day (up to $500) that does not require receipts; discontinued after 2022 for most.
- Form T2200 – The Declaration of Conditions of Employment form required from an employer to support certain employee expense deductions.
- Form T777 / T777S – CRA forms used to claim employment expenses, with T777S being the simplified version for home office claims.
- Form TP-59-V – Quebec's provincial form used by employees to claim work-related expenses on their provincial return.
- Form TP-64.3-V – Quebec equivalent of the T2200 form; confirms employment conditions requiring work-related expenses.
- Gratuities – Tips or extra payments received through employment, generally taxable if controlled or reported by the employer.
- Half-Year Rule – A CRA rule that limits the first-year CCA claim to 50% of the normal rate, regardless of when the asset was purchased.
- Honoraria – Payments made for services rendered voluntarily or outside of a formal employment contract; typically taxable.
- Industry Certification Renewal – Required periodic renewal of a professional designation or license; deductible if tied to maintaining employment.
- Matching Deductions to Income – Coordinating employment expense claims with higher-income years to improve overall tax efficiency.
- Meals and Entertainment Expenses – Partially deductible (50%) for commission employees when directly related to earning income.
- Missed Deductions – Eligible employment expenses that often go unclaimed due to lack of awareness or insufficient documentation.
- Motor Vehicle Expenses – Work-related car expenses that may be deducted if the vehicle is used for employment purposes and not reimbursed.
- Office Rent (Commission Employees) – Rent paid for a dedicated workspace that may be deductible if CRA criteria are met.
- Optional Claiming (CCA) – The ability to claim any amount of CCA up to the maximum allowed, offering flexibility in managing taxable income.
- Parity or Advisory Committees – Industry-specific committees where mandatory participation and dues may be considered deductible.
- Prescribed Rate (CRA CCA) – The fixed percentage at which assets in a given CCA class may be depreciated annually.
- Professional Dues – Fees paid to maintain membership in a regulated profession or union; may be tax-deductible.
- Proceeds of Disposition – The amount received when a capital asset is sold, which is used to adjust the UCC balance.
- Provincial Licensing Dues – Fees paid to provincial regulatory authorities required for professional practice; usually deductible.
- Recapture (CCA) – Income added back when the proceeds from disposing of assets exceed the UCC of a class that has been fully disposed.
- Reimbursements – Payments made by an employer to cover employee expenses; typically not taxable unless they exceed actual cost or are lump sums.
- Revenu Québec – The provincial tax authority in Quebec responsible for tax collection and administration.
- Schedule E (Quebec) – A form used on the Quebec TP-1 return to report professional dues for provincial tax purposes.
- Signing Bonus – A one-time lump sum paid to a new employee upon joining a company, considered taxable income.
- Statement of Employment Expenses – The formal CRA document (Form T777) used to itemize and claim allowable deductions from employment income.
- Substantiating Business Use – Providing clear records to demonstrate that a personal expense was partly or fully related to earning employment income.
- Supplies (CRA Definition) – Items like paper, pens, and printer ink used directly in earning employment income, potentially deductible if not reimbursed.
- T4 Slip – A summary issued by employers showing employment income and deductions for the year, required for personal tax filing.
- Taxable Benefits – Non-cash compensation (e.g., employer-paid insurance, housing) included in employment income for tax purposes.
- Temporary Flat Rate Method – A discontinued method for home office deductions allowing a fixed daily amount without detailed receipts.
- Terminal Loss – A deductible loss that occurs when the remaining UCC exceeds the proceeds of disposition for a class that no longer holds assets.
- Undepreciated Capital Cost (UCC) – The remaining balance of a capital asset’s value after past CCA deductions, used to calculate future depreciation claims.
- Union Dues – Mandatory fees paid by employees to unions, typically deductible for tax purposes.
- Voluntary Memberships – Memberships that are not required for employment or licensing and therefore not deductible under CRA rules.
- Workspace in the Home Expenses – Deductible home office expenses for eligible employees who work from home regularly, requiring T2200 or T777S.
- Workspace Rent (Outside the Home) – Rent paid by commission employees for an external workspace; may be deductible under CRA guidelines.
- Zero-Emission Vehicle (Class 54) – A specific category of vehicle eligible for a 100% first-year CCA deduction, subject to CRA conditions.