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T2200 [zero commission] Expenses question
May 10, 2020
12:57 pm
rockout
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I had two employers last year, both issued a T2200 and I have a 100% work from home situation. I had commission for the first employer but the second one had zero commission income for 2019.
I claim a home office, vehicle and expenses. My tax program is complaining that I cannot Netfile my tax return because I am claiming expenses with zero income.
As a test I added a dollar in the zero commission section and the error went away.
Does anyone know how to handle this situation?
Thanks in advance!

May 10, 2020
2:46 pm
Norman1
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My guess is that you'll have to carry the home expenses for the second employer forward.

According to CRA: Work-space-in-the-home expenses, home expenses cannot create or increase a loss from employment:

Work-space-in-the-home expenses

The amount you can deduct for work-space-in-the-home expenses is limited to the amount of employment income remaining after all other employment expenses have been deducted. This means that you cannot use work space expenses to create or increase a loss from employment.

You can only deduct work space expenses from the income to which the expenses relate, and not from any other income.

If you cannot deduct all your work space expenses in the year, you can carry forward the expenses. You can deduct these expenses in the following year as long as you are reporting income from the same employer. However, you cannot create or increase a loss from employment by carrying forward work space expenses.

Zero commission income from second employer in 2019 means a $0 maximum for the home expenses related to the second employer that one can claim for 2019.

May 10, 2020
3:59 pm
rockout
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Thank you for your response, it makes sense.

My salary has a base and variable (commission component). It was the variable that was zero for 2019 for the second employer. I will get a T2200 from the same employer for 2020 and it will have commissions. That said, it looks like I will need to carry forward the home office and vehicle amounts into my 2020 return.

May 10, 2020
4:59 pm
Norman1
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I think one should be able to deduct the expenses against the salary portion of employment income as well.

Aren't both the base and variable components combined in Box 14 of the T4 slip? According to Box 14 (Employment Income) list, commissions are included.

Could this be an issue with how things were fed into the tax software? Maybe the software should be instructed to record the the expenses against the salary portion and not against the $0 commission portion? sf-confused

May 10, 2020
9:02 pm
cruzinalong
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rockout said
I had two employers last year, both issued a T2200 and I have a 100% work from home situation. I had commission for the first employer but the second one had zero commission income for 2019.
I claim a home office, vehicle and expenses. My tax program is complaining that I cannot Netfile my tax return because I am claiming expenses with zero income.
As a test I added a dollar in the zero commission section and the error went away.
Does anyone know how to handle this situation?
Thanks in advance!  

A few years ago I rounded up my T5 slips to the next dollar. There was no problem when I NETFILED. You pay the same amount of tax since they do not bother with cents.

May 11, 2020
3:38 pm
Norman1
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Employment Expenses Guide (T4044) has more details.

Employment expenses can be claimed against salary. In Chapter 3 - Employees earning a salary, it has the following:

Work-space-in-the-home expenses

You can deduct the part of your costs that relates to your work space, such as the cost of electricity, heating, and maintenance. However, you cannot deduct mortgage interest, property taxes, home insurance, or capital cost allowance.

That's slightly different than what can be claimed against commission employment income. This is from Chapter 2 - Employees earning commission income:

Work-space-in-the-home expenses

You can deduct the part of your costs that relates to your work space, such as the cost of electricity, heating, maintenance, property taxes, and home insurance. However, you cannot deduct mortgage interest or capital cost allowance.

May 11, 2020
4:31 pm
Loonie
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Be careful about deducting office expenses for home office. It may come back to bite you later when you sell your house or something like that.

Unfortunately, I can no longer remember the details, but I do remember that we decided NOT to count office expenses at home some years back because of later consequences that were pointed out by our accountant.

Perhaps someone else can add more to this.

May 11, 2020
6:05 pm
Bill
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The expenses rockout is claiming here are expenses of an employee who works out of home, no effect on subsequent capital gains exemption when home sold.

If you operate your own business (not employee) out of your house and claim part of the house as an office, etc, and you also choose to claim CCA (depreciation) on that part of the house then your subsequent capital gains exemption (when you later sell or dispose of the house) will not apply to that part, for the years you claimed CCA, of the house proceeds. You can still claim other expenses with no problem, but if you also choose to claim CCA things change. I believe.

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