Category Archives: 008(1)

008(1), 008(10), Burden of Proof, Employment, Income Tax Act, Tax Court of Canada, Tax Deduction

Deducting Employment Expenses – Sas Ansari

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Deducting Employment Expenses

Leith v The Queen, 2015 TCC 314

At issue was whether the taxpayer met the procedural and legal requirements enabling him to deduct employment expenses from his income.

The Income Tax Act prohibits the deduction of employment expenses from income other than those expressly permitted by section 8.

ANALYSIS

In order to be deductible, the taxpayer:

  1. must have a T2200 Declaration of Conditions of Employment form for certain expenses;
  2. must incur the expense for purposes of earning income from employment,;and
  3. must be permitted to deduct the amount by a provision in section 8.

Subsection 8(10) of the ITA limits the deductions allowed under subsection 8(1) paragraphs (c), (f), (h), and (h.1) and subparagraphs (i)(ii) and (iii).  For these expenses, the taxpayer needs the prescribed form (T2200) signed by the employer certifying that the conditions for the deduction has been met, and this form must be filed with the taxpayer’s return of income for the year.  The T2200 form states that it doesn’t have to be filed but must be kept in case the CRA asks for it.  This administrative practice seems at odds with the statutory requirement. owever, subsection 220(2.1) give the Minister the power to waive the requirement that a person file a prescribed form or document.  The form, therefore, has the effect of waiving the filing requirement as long as the form is provided upon request (para 7).

Here, the CRA assumed that the taxpayer did not incur the expenses in respect of employment activities. The Taxpayer failed to demolish the assumption. The evidence of the taxpayer was not credible, in part because he altered his T2200 and backdated his personal calendars.  The problem with the alterations, even if valid, is that it was not possible for the court to determine whether or not the changes were made before the document was certified or not.

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008(1), Employment, Income Tax Act, Legal Fees, Tax Court of Canada, Tax Deduction

Professional Employee Legal Expenses – Sas Ansari

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Professional Employee Legal Expenses

Ross v The Queen, 2016 TCC 170

At issue was whether expenses related to defending against complaints to a self-governing body with jurisdiction over the employee are deductible under s ITA paragraph 8(1)(b).

The Tax Court of Canada held that all of the amounts were not “legal expenses”, only the amount paid to defend against the complaints filed with the college were legal expenses. The amounts for examinations, travel to take examinations, and urine tests related to the investigation and its outcome are not legal expenses.

Even though a portion of the expenditures were legal expenses, it was nevertheless not deductible.  Paragraph 8(1)(b) is narrow in scope and allows an employee to deduct legal expenses incurred in attempting to collect unpaid salary or wages, or attempting to settle a dispute with an employer of former employer with respect to salary or wages due to the employee – Fenwick v The Queen, 2008 FCA 370.

In this case, legal expenses were incurred to be able to continue to practice a profession. Such expenses do not fall within the wording of 8(1)(b) – Blagdon v The Queen, 2003 FCA 269.

Sas Ansari, BSc BEd PC JD LLM PhD (exp) CPA In-Depth Tax 1, 2 &3

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