In prior months we discussed deductions allowed against an employee's commission income. We will now provide tips regarding deductions allowed to employees earning only a salary.

If you are an employee earning only a salary, you can deduct 50% of the cost of your food and beverages incurred in earning your salary, provided:

Your work contract requires you pay your own travel expenses.

You are required to be away for at least 12 hours from the municipality of your employer's location where you normally report for work.

Your employer provides you a signed copy of the form T2200, Declaration of Conditions of Employment.

You can deduct a percentage of all the expenses related to your vehicle. This would include gas, repairs, insurance, lease costs, interest costs, and capital cost allowance (depreciation). You must have a log book to support the percentage of business travel versus personal travel. There are restrictions with respect to "luxury" vehicles limiting the maximum cost in which you can calculate capital cost allowance ($30,000 plus applicable sales taxes in 2002) and restriction to any related interest expense. If a "luxury" vehicle is leased, CCRA imposes a limit on the monthly lease deduction.

Should you qualify for a deduction for an office in your home, you can deduct a portion of your electricity, heating, cleaning materials property taxes and home insurance, based on the size of your office in relation to the size of your home. You cannot deduct mortgage interest or capital cost allowance. If you rent your home, you can deduct a portion of your rent. You cannot use these expenses to create or increase a loss from employment but can carry forward any unused expenses to a future year.