Commission employees
If you are an employee who sell goods or negotiate contracts for an employer you can deduct some of the amounts you paid to earn commission income.
Employment conditions
To deduct the expenses you paid to earn commission income, you have to meet all of the following conditions:
- Under your contract of employment, you had to pay your own expenses
Note
You are not considered to have paid your own motor vehicle expenses if your employer reimburses you or you refuse a reimbursement or reasonable allowance from your employer. - You were normally required to work away from your employer’s place of business
- You were paid in whole or in part by commissions or similar amounts. These payments were based on the volume of sales made or the contracts negotiated
- You did not receive a non-taxable allowance for travelling expenses. Generally, an allowance is non-taxable as long as it is a reasonable amount. For example, an allowance for the use of a motor vehicle is usually non-taxable when it is based solely on a reasonable per-kilometre rate
- You keep with your records a copy of Form T2200, Declaration of Conditions of Employment, which has been completed by your employer.
Topics
- Accounting and legal fees
- Advertising and promotion
- Allowable motor vehicle expenses
- Food and beverages
- Entertainment expenses
- Lodging
- Parking costs
- Supplies
- Licences
- Bonding premiums
- Medical underwriting fees
- Computers, cell phones, and other equipment
- Salaries for an assistant
- Office rent
- Training costs
- Travel fare
- Home office expenses for employees
- Excess employees profit-sharing plan (EPSP) amounts
Note
You cannot deduct the cost of travel to and from work, or other expenses, such as most tools and clothing.
Your employment expenses include any GST and provincial sales tax (PST), or HST, you paid on these expenses. You may be able to get a rebate of the GST/HST you paid. For more information, see Employee GST/HST Rebate.
However, except for interest and capital cost allowance (CCA) on your vehicle, the total of the expenses you can deduct cannot be more than the commissions or similar amounts you received in the year.
If your total commission expenses (except interest and capital cost allowance (CCA) on your vehicle) are more than the commissions or similar amounts you received, there is another method you can use to claim expenses. Using this method might be to your advantage because it allows you to claim your expenses as a salaried employee instead of as a commission employee. If you deduct expenses this way, your claim is not limited to the commissions you received in the year. If you choose this method, you would claim only travelling expenses (food and lodging), motor vehicle expenses (including interest and CCA on your vehicle), and certain other expenses if applicable, such as the cost of supplies or office rent. However, to do so, you have to meet the same conditions that a salaried employee must meet for claiming Travelling expenses and Motor vehicle expenses.
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Example
Andrew works for a company that sells video equipment and meets the employment conditions for commission employees. During 2024, he recorded the following information:
- 45,000 Salary received
- plus 5,000 Commissions received
- equals 50,000 Total employment income
Expenses:
- 1,000 Advertising and promotion
- plus 6,000 Travelling expenses
- plus 1,500 Capital cost allowance
- plus 500 Interest on car loan
- equals 9,000 Total expenses
Andrew's total expenses of $9,000 are more than his commissions of $5,000. Therefore, his claim for expenses is limited to $5,000 plus the CCA of $1,500 and interest of $500, for a total claim of $7,000. However, he could choose to claim expenses as a salaried employee, in which case he could claim the travelling expenses of $6,000, but not the advertising and promotion expenses. Using this method, Andrew also claims the CCA of $1,500 and interest of $500, for a total claim of $8,000.
Forms and publications
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