Module 3: Employment Income

Question 1

Employment income

Answer 1

Employees receive T4, T4A, T4ps

Incl in employment inc: any pmts and benefits received is taxable income

Question 2

Taxable benefits (list) P.U.R.S.E

Answer 2

TAXED IF RECEIVED:
Bonuses
Use of emplyer auto
Payments and reimbursements
RRSP contributions
Stock option benefits
Etc….

P AYMENTS AND REIMBURSEMENTS
U SE OF EMPLOYER AUTO
R RSP CONTRIBUTIONS
S TOCK OPTION BENEFITS
E TC…

Question 3

T4A

Answer 3

• a catch all slip
• for various income or taxable benefits

Question 4

T4PS

Answer 4

For dividend income to employees

Question 5

Canada Pension Plan (CPP)

Answer 5

• all employees in canada make contributions
• employer matches employee contributions
• retire age 60-65
• max contribution: $60,000/yr

Question 6

Employment insurance

Answer 6

• employees must contribite
• employER contributes 1.4x employees earnings
• max contribution: $60,000

Question 7

CPP & EI contributions : Tax credits

Answer 7

For Cpp and EI on schedule 1

Question 8

CPP+ EI contributions: overpayments

Answer 8

TO CLAIM BACK: FORM T2204 + claiming amount calculated on line 44800 (CPP EXCESS) and line 450 (EI excess)

Question 9

CPP+ EI contributions: under payments

Answer 9

• not common
• do not have to be paid when filing tax
• payroll problem not ours

Question 10

Employment expenses

Answer 10

EmployEES and biz owners: cannot claim on:
- Travel to and from work
- amounts for work clothes
- personal grooming

Question 11

How to deduct employment expenses (conditions that MUST be met [4] )

Answer 11

Conditions MUST be met:
- req to pay own expenses under contract of employment (can be implied instead of written)
- employee did not receive an allowance for expense
- allowance incl in income (??)
- employer must issue + sign T2200 (declaration of conditions of employment)
-

Question 12

What is: T2200

Answer 12

Declaration of conditions of employment

Specifies type of expenses that can be claimed, discloses reimbursements to employees

Question 13

Form T777 - employment deductions (steps)

Answer 13

Step 1: signed T2200

Step 2: allowable expenses must be specified

Step 3: vehicle expenses: can only deduct business portion (KM log req)

Step 4: reimbursements: if reimbursed, cannot deduct on T777

Question 14

ALLOWED Home office expenses for all salary and commisioned employees
(Pg.60)

Answer 14

Electricity
Water
Heat
Utilities portikn of condo fees
Home internet access (NOT connection fees)
Maintenance and minor repair costs ( not renovations)
Rent paid for house or apartment

Question 15

Additional ALLOWED home office expenses for COMMISSION EMPLOYEES
(Pg60)

Answer 15

Home insurance
Property tax
Lease of: cell phone, computer, laptop, tablet, fax machine , etc…– if resonable relates to earning income

Question 16

Home office expenses that CONNOT BE CLAIMED
(Pg60)

Answer 16

• mortgage interest
• principal mortgage payments
• home internet commection fees
• furniture
• capital expenses (replaving windows, furnace, etc..
• wall decor)

Question 17

Home office expenses (steps)
(Pg61)

Answer 17

1. Must be on T2200 form
2. Expenses limited to deductions Allowed for biz
3. Criteria to deduct: must be where employee principally performs their employment duties– min 50%
4. T777 & calculations : if reimbursed, cannot be deducted on T777 (Reimbursement needs to be added )

Question 18

What is: T777

Answer 18

Statement Of Employment Expenses