Employment Income

By Victoria E. Turnbull

Employment Income vs. Self-Employment Income

I often have to explain to my clients the difference between Employment Income and self-employment income. In the following series of posts, I will discuss the different types of income and their related expenses and deductions. Today we will discuss the most common type of income, known as Employment Income.

Employment Income is earned when you are working for an employer and earning a salary or a wage. Federal tax, Provincial tax, Canada Pension Plan contributions, and Employment Insurance deductions are taken off of your paycheck and submitted to the Canada Revenue Agency on your behalf. At the end of the calendar year, no later than February 28th, you will be issued a T4 stating how much income and deductions were distributed/contributed throughout the previous tax year.

Are You Not Sure How To Issue Your Employees a T4? Get Our Help!

If I have employment income, can I deduct work related expenses?
If your employer requires you to pay for work related expenses such as office supplies, motor vehicle expenses, etc., you can deduct these from your employment income on the T777 schedule of your personal income tax return. However, in order to claim your expenses, you must get your employer to sign the T2200 form (Declaration of Conditions of Employment).

Do I have to pay tax on the benefits I receive from my employer?
Yes. Taxable benefits include anything received by the employee that is considered a personal benefit.

Examples of Taxable Benefits:

• Paid vacations
• Medical premiums
• Significant gifts (over $500.00)
• Club dues (when unrelated to the employer’s business)
• Tuition fees for general interest studies (Unless mandatory by the employer)

Examples of Non-taxable benefits:

• Subsidized meals
• Merchandise discounts
• Moving expenses
• Uniforms
• Employer’s portion for medical premiums

If you have any questions about Employment Income, please give me a call at 289.389.2694 or you can email me at victoria@myhamiltonaccountant.com and I would be happy to help you!

Disclaimer:
THIS ARTICLE deals with a number of complex issues in a concise manner; it is recommended that accounting, legal or other
appropriate professional advice should be sought before acting upon any of the information contained therein.

Although every reasonable effort has been made to ensure the accuracy of the information contained in this letter, no individual or
organization involved in either the preparation or distribution of this letter accepts any contractual, tortious, or any other form of
liability for its contents or for any consequences arising from its use.