Which employment expenses are eligible

Once you understand what counts as employment income and the basic categories of deductible expenses, the next step is knowing how to apply those rules effectively in your day-to-day life. Many employees are eligible for deductions but do not realize what they can claim—or how to maximize those claims.

This article focuses on how to use the deductions available to you, beyond just listing them. It includes common use cases, nuances between salaried and commissioned roles, and examples of situations where deductions may be missed.

How to Recognize Deductible Expenses in Real Life

Instead of memorizing lists of eligible expenses, it helps to think in terms of your job responsibilities and who pays for what. If you incur a cost because your employer requires it and they do not reimburse you, that is a strong indicator the expense may be deductible.

Here are several everyday examples:

• You drive your own vehicle to client meetings but are not reimbursed. You may deduct the fuel, insurance, and maintenance costs related to the business portion of those trips.

• You pay out-of-pocket for printer ink, pens, and envelopes as part of your job as a field representative. These may count as employment supplies.

• You work from home four days a week, using your own internet and a dedicated workspace. If you have a signed T2200, you may be able to deduct a portion of your utilities and workspace costs.

Lesser-Known Deductions That Often Get Missed

While home office and vehicle expenses get the most attention, there are other allowable deductions that often go unused:

• Cell phone and internet costs: If you regularly use your personal phone or data plan for work calls or remote access, you can deduct the business-use portion. Keep a log or phone bill to support the claim.

• Apprentice mechanics’ tools: If you are in a trade and had to buy tools to do your job, you may qualify for a special CRA deduction, in addition to any tool allowances your employer offers.

• Meals while traveling within your region: If you are away from your regular place of work for a full shift and are not reimbursed for meals, part of the cost may be deductible—especially for commission earners.

• Annual license or certification fees: These are fully deductible if the credential is required to maintain your job.

Optimize helps identify these overlooked areas by looking closely at your occupation, responsibilities, and the types of costs that are common in your field.

How to Track and Support Your Claims

Even if an expense is technically eligible, your claim may be denied without proper documentation. The CRA and Revenu Québec require clear proof that:

1. The expense was required by your job

2. You were not reimbursed

3. The expense was paid during the relevant tax year

4. You can substantiate your usage or business portion

Best practices include:

• Keeping a logbook for any business vehicle use

• Saving receipts, especially for recurring monthly bills like phone and internet

• Calculating the square footage and percentage of your home used for work

• Keeping your signed T2200 or TP-64.3-V on file for at least six years

Next-Level Strategy: Matching Expenses to Income

Once you know what can be deducted, the next question is when to claim certain expenses for maximum impact. This is especially important if:

• Your income fluctuates from year to year

• You are on commission or have performance bonuses

• You have expenses that span multiple tax years

At Optimize, we can help you coordinate your deductions with your income profile. For example, claiming expenses in a high-income year will usually yield a larger tax saving than in a low-income year.