In order for an employee to deduct these expenses, the employee must meet the following:

• Employee must be required to pay his own travel and motor vehicle costs and must have form T2200 signed by the employer to certify that this is the case
• The person must be ordinarily required to carry on his duties away from the employer’s place of business
• The person must not be in receipt of an allowance for travel costs that was not included in income

Items that can be deducted include accommodation, airline or rail tickets, taxi fares and meals. In terms of meals, only 50% of the cost can be deducted. Motor vehicle cost can also be deducted when an employee uses his own vehicle to carry out employment duties. There are no limitations for these deductions compared to the salesperson deduction which was limited by the commission.

Note that a salesperson can also claim these expenses for deductions. However, if he claims these expenses then he is not eligible to claim for salesperson expense deductions.

Individual employees who are involved with the selling of property or the negotiating of contracts are permitted to deduct all expenses that can be considered necessary to the performance of their duties. In order for a salesperson to be eligible to deduct these expenses, the sales person must meet the following:

• The salesperson must be required to pay his own expenses. The employer must sign Form T2200 certifying that this is the case.
• The salesperson must be ordinarily required to carry on his duties away from the employer’s place of business
• The salesperson must not be in receipt of an expense allowance that was not included in income
• The salesperson must receive at least part of his remuneration in the form of commissions or by reference to the volume of sales

The items that the salesperson can deduct include:

• Advertising and promotion
• Meals and entertainment (50%)
• Lodging
• Motor vehicle cost
• Parking
• Work space in the home costs (maintenance, property taxes and insurance)
• Supplies
• Licenses
• Bonding and liability insurance premiums
• Salary to assistant or substitute
• Office rent
• Training costs
• Transportation costs
• Computers and office equipment (lease only)

Note that the maximum amount that can be deducted is limited to the person’s commissions received during the year. Also, in order for the sales person to deduct 50% of the cost for meal and entertainment, the salesperson must be away from municipality or metropolitan area where the employer’s establishment is located for at least 12 hours.

Employees are allowed to deduct dues paid to professional organizations or union, office rent paid and costs of maintaining a home office, salaries to an assistant who assists with employment duties and the cost of supplies used in employment related activities.

Business investment loss includes capital losses arising from the disposition of shares and debts of a small business corporation (SBC). SBC is a Canadian controlled private company in which 90% of its fair market value of its assets is business asset and 50% of the business must be carried in Canada. One half of this loss would be available as allowable business investment loss (ABIL). This loss is considered non-capital so this loss can offset any taxable income. However, this can only be carry back 3 years and forward for 10 years. After the tenth year, the losses not yet offset are converted to capital loss. Therefore, after the tenth year, the remaining losses can only offset capital gains.

Note that non-capital loss can be carry back three years and carry forward twenty years. This loss may be use to deduct any types of gain.

For businesses, complete Form T661 and Schedule T2SCH31. For individuals, complete Form T661 and Form T2038 (IND). These forms should be submitted with the T1 or T2 income tax return depending on your status (Individual or Corporation) or file it within 12 months of the income tax return due date for the year in which the research and development cost has incurred.

The project must relate to improving scientific technologies or relations and its understandings. It must also deal with uncertainties within the technological and scientific area. Also, a systematic investigation must be incorporated by a qualified personnel.

The following are examples of qualified projects:

• Experimental development to create new products and services or improving existing products
• Applied research to improve scientific knowledge with certain application
• Basic research to improve scientific knowledge
• Supporting the experimental development, applied research or basic research for the work in engineering, design, operations research, mathematical analysis, computer programming, data collection, testing or psychological research

The following are examples of non-qualified work:

• Social science and humanities research
• Commercial production of a new or improved product or process
• Style changes
• Market research or sales promotion
• Quality control
• Routine testing
• Routine data collection
• Refining natural gas and minerals
• Development based on design or routine engineering practice