If employment earnings include commissions, you may be able to claim certain expenses for which you have not been reimbursed. Form T2200, Declaration of Employment Conditions, must be completed, signed by the employer and submitted with your tax return.

You should exercise caution before taking for granted that certain payments made by employers to employees are not taxable.

CRA has been fighting a losing battle in the courts over this issue over the past few years, but they don’t always lose.

The Federal Court of Appeal has recently overturned a decision by the trial division of the Federal Court of Appeal and ruled in favour of CRA in the case of The Queen v. William R. Phillips. The Court considered as taxable a $10,000 payment made by Mr. Phillips’ employer as compensation for higher housing costs incurred following relocation. The obvious solution here is to look for a better way of receiving the $10,000. Always remember there is more than one way to skin a cat (Figuratively speaking of course).

For the typical taxpayer, there is a way to get immediate tax relief while funding your RRSP program. Most of us find that each paycheque arrives with some money already deducted for CRA. The amount of this at source deduction is carefully calculated to approximate what your actual tax liability is going to be.

The typical Canadian, when filling out the April tax form, usually finds that a small refund is owing, indicating, in fact, that the government kept just a little too much of your money through its withholding program. If you are contributing to an RRSP program, the chances are that you will find your refund of overpayment is fairly sizable.

The reason for this is that when CRA decides how much to hold back, it does not know in advance the amount you will contribute to a RRSP by February of the following year. The challenge is to calculate an at source deduction rate which considers your future RRSP deduction.

Some people like to get this big refund cheque each year. Do not use the tax department as a method of forced savings. You do not start getting interest on your money until after May 1st of the next year. There are much better ways to invest your hard earned dollars.

Make sure you are having the correct amount deducted from your paycheque, and no more. Often when people are paying into an RRSP, they follow the government guidelines, which means their employer will be deducting too much money from their cheque.

Get CRA to do the work for you. If you are contributing to a prearranged automatic monthly RRSP plan, contact your District Taxation Office and request the form for Income Tax Source Withholding Reductions. Once the tax department has all the information to work with, the government will authorize your employer to reduce your withholding by the correct amount. That means more money in your pocket each week! The amount of extra money depends on your individual tax situation, as well as the RRSP plan that you have chosen.

When you can establish with CRA that you are having more taxes deducted from your pay cheque than is correct, you can instruct your employer to deduct and deposit these funds directly into a RRSP. This is called a “reduced withholding tax.”

By establishing and maximizing a tax free base, you can significantly impact your retirement income. For example, a $20,000 income with a $3,600.00 yearly RRSP contribution would generate about $1,000.00 in reduced taxes. This would generate an immediate tax reduction of about $83.00 per month. Also, the $3,600.00 could have been earning interest right from the beginning of the year. *** This only makes sense if you know how to protect your RRSP from the various tax grabs.

Section 8: (1) b outlines that an employee has the right to use legal expenses as a deduction if the money was spent to collect wages or to qualify for wages.

You are also able to deduct travel, food, and accommodation expenses when you are required to travel away from your normal work area. This would normally be for distances over 40 km from your home or office. Of course, this would only apply if your employer does not reimburse you for these expenses.

Section 8: (3) In order to deduct meals you need to be away from the employer’s municipality for twelve or more hours.

Section 8: (2) b outlines that expenses occurred at your employer’s place of business are not deductible. This implies that deductions away from there are acceptable.

Remember that in many cases a “certificate of employer” is required to qualify for the employment expenses.

It’s important to note that the law is clear in respect to being honest, and that you give the correct data as to the personal information you supply to your employer for income tax deduction purposes. However, I doubt that they would ever check this unless you are caught cheating on your tax return.