Employment deductions — what employees can deduct
Deductions allowed in computing income from office or employment
Section 8 provides an exhaustive list of deductions an employee can claim against employment income. Unlike business owners, employees can only deduct what is specifically listed in s.8 — no other deductions are available.
Plain-language explanation
Section 8 is the "permitted deductions" provision for employees. Unlike self-employed individuals (who can deduct any legitimate business expense under s.9), employees can only deduct what is specifically listed in s.8(1). If it is not on that list, it is not deductible from employment income.
Key deductions under s.8:
*s.8(1)(b) — Legal fees to collect salary:* Legal costs paid to collect your employment income (e.g., suing for wrongful dismissal) are deductible.
*s.8(1)(f) — Commission employee expenses:* Employees who earn commissions and are required to pay their own expenses can deduct travel costs, advertising, entertainment (50%), and more. Requires Form T2200 from employer.
*s.8(1)(h) — Travel expenses:* If required to travel away from your employer's place of business, you can deduct travel costs. Requires T2200.
*s.8(1)(i) — Union dues and professional fees:* Dues to unions and professional organizations required to maintain employment are deductible (also claimable as a credit on line 21200).
*s.8(1)(j) — Motor vehicle expenses:* If you use your car for employment (not just commuting) and have a T2200, you can deduct vehicle costs proportional to employment-use kilometres.
*s.8(13) — Work space in home (home office):* If required by your employer and exclusively used for employment, you can deduct home office expenses. Cannot create a loss; unused amounts carry forward.
Form T2200: Almost all employment deductions (except union dues) require a signed T2200 from your employer certifying you were required to pay these expenses.
Example
Rahim is a sales rep who drives 25,000 km/year total, 20,000 for work. His annual vehicle costs are $10,000. Employment portion: $10,000 × 80% = $8,000 deductible under s.8(1)(j). His employer signs a T2200 confirming the requirement.
Amendment history
Significant changes to this provision. Older versions help you understand rules that applied in prior tax years.
COVID flat-rate home office method (s.8(13)) discontinued for 2023. The temporary $2/day flat rate (max $500) that was available for 2020–2022 expired; employees must use the detailed method with a T2200 signed by their employer.
Before
Flat-rate $2/day (max $500/year) allowed without T2200 for 2020–2022
After
Detailed method only — T2200 required; expenses must be tracked and allocated
Common questions
Can I deduct my home internet as an employment expense? +
Partially. If you have a T2200 allowing home office deductions, a portion of your home internet attributable to the workspace can be included in home office expenses under s.8(13). You cannot deduct the full bill — only the workspace portion.
Is commuting to the office deductible? +
No. Commuting from home to a regular place of employment is personal travel and not deductible. Only travel *from* the employer's place of business to other locations is deductible under s.8(1)(h).
What is Form T2200? +
Declaration of Conditions of Employment — your employer signs it to confirm you were required to work from home or pay certain work expenses. It is a prerequisite for most employment deductions under s.8. CRA can request it, so keep the original on file.
Key terms
Related sections
Source: Income Tax Act, RSC 1985, c. 1 (5th Supp.), section 8. — Read the official text on Justice Canada
These summaries are for educational purposes only and do not constitute legal or tax advice. Speak with a CPA for advice on your specific situation.