Using employment expenses to get a free raise

Posted on: December 6th, 2013 by Real Estate Accountants No Comments

Falling into placeHow can your employer give you a raise, without spending any money?

Ask your employer to fill out a T2200 form – Declarations of Conditions of Employment. With a T2200, you have the ability to deduct employment expenses such as vehicles, assistants, supplies, etc. This means paying less in personal taxes. You’ll need this before you file your personal tax return, so most gather it in January.

By providing T2200s for legitimate conditions, this potentially creates an opportunity for your employer to provide “a raise” to you, without costing your employer a penny.
This strategy is particularly effective when your spouse is in a low income tax bracket. You can hire your spouse as an assistant, thus spreading income amongst both spouses and saving taxes.

While this can be very effective planning, it does have some limitations and qualifications that you should discuss with your advisors. Further, some employers resist signing these documents in perfectly legitimate situations, for reasons that can be vague and unjustified. Where legitimate, I certainly encourage their use amongst our clients who have employees.

The T2200 form is available from the CRA: http://www.cra-arc.gc.ca/E/pbg/tf/t2200/

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