As an employee, your tax returns can be very simple; your employer gives you a T4 and you file your return based on it. But did you know there are ways you can maximize your tax return that you may not be taking advantage of? One main way is the T777 form, which is the Statement of Employment Expenses.
The T777 form outlines some key expenses that you can write off, even as a salaried or commission-based employee; with permission from your employer to do so. Some common expenses that you are eligible to write off would be accounting and legal fees, advertising, cellphone, meals and entertainment, parking, supplies and traveling.
There is also the opportunity to calculate your vehicle expenses and home office expenses if you own a vehicle and use it for business or operate out of a home office.
For the vehicle, only trips pertaining to business are deductible (ex: driving to get supplies or to meet clients etc.). What does not qualify would be driving home, to work or anywhere that is not business-related. CRA does legally require a vehicle logbook to track exactly how many kilometres in a year are related to business. The value of the deduction for 2019 would be $0.58 per the first 5,000 kilometres, then $0.52 per additional kilometre.
As well for home offices, CRA requires your home office to be a place in which you meet clients and incur revenue, or the registered place of business. If this is the case for you, you maybe able to claim this deduction. Home office deductions are usually the calculation is based on a percentage. Divide your total home square footage by the square footage of your office and apply this percent to all home expenses (ex: utilities, property tax, rent, mortgage interest).
There is also an opportunity to provide information on capital cost allowance (CCAs), which refer to assets to your company (ex: computers, vehicles etc.) and calculate the amortization, which is an expense also.
Keep in mind for any business-related expenses, there must be corresponding proof. As well, personal portions of any expense cannot be written off for business purposes (accounting/legal fees for personal tax or personal situations, meals and entertainment that was not for a client, personal travelling, personal use of cellphones and vehicle, cannot write off total home expenses). This requires keeping accurate and up to date bookkeeping and holding onto receipts/invoices to ensure you are protected in an audit situation.
At Jibe Accounting, we are happy to assist you navigate the T777 and help you determine what expenses are eligible; and making the most out of your tax return!