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Income Tax Act Section 8

Deductions

Deductions allowed 8. (1) In computing a taxpayer's income for a taxation year from an office oremployment, there may be deducted such of the following amounts as are

wholly applicable to that source or such part of the following amounts as mayreasonably be regarded as applicable thereto

Volunteers' deduction(a) in respect of each employer of the taxpayer that is a government,municipality or public authority, the lesser of $1,000 and the total of allamounts received in the year by the taxpayer from the employer that are

(i) included in the taxpayer's income for the year from an office oremployment, and

(ii) from the performance, as a volunteer, of the taxpayer's duties as

(A) an ambulance technician,

(B) a firefighter, or

(C) a person who assists in the search or rescue of individuals or in otheremergency situations,

except that no amount may be so deducted in respect of an employer if thetaxpayer is employed in the year, otherwise than as a volunteer, by theemployer in connection with the performance of any of the duties referred to insubparagraph (ii) or of similar duties;

Legal expenses ofemployee

(b) amounts paid by the taxpayer in the year as or on account of legalexpenses incurred by the taxpayer to collect or establish a right to salary orwages owed to the taxpayer by the employer or former employer of the

taxpayer;Clergyman's residence

(c) where the taxpayer is a member of the clergy or of a religious order or aregular minister of a religious denomination, and is in charge of orministering to a diocese, parish or congregation, or engaged exclusively infull-time administrative service by appointment of a religious order orreligious denomination, an amount equal to

(i) the value of the residence or other living accommodation occupiedby the taxpayer in the course of or by virtue of the taxpayer's office oremployment as such a member or minister so in charge of orministering to a diocese, parish or congregation, or so engaged in suchadministrative service, to the extent that that value is included incomputing the taxpayer's income for the year by virtue of section 6, or

(ii) rent paid by the taxpayer for a residence or other livingaccommodation rented and occupied by the taxpayer, or the fair rentalvalue of a residence or other living accommodation owned andoccupied by the taxpayer, during the year but not, in either case,exceeding the taxpayer's remuneration from the taxpayer's office oremployment as described in subparagraph 8(1)(c)(i);

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Teachers' exchangefund contribution

(d) a single amount, in respect of all employments of the taxpayer as ateacher, not exceeding $250 paid by the taxpayer in the year to a fundestablished by the Canadian Education Association for the benefit ofteachers from Commonwealth countries present in Canada under ateachers' exchange arrangement;

Expenses of railway

employees

(e) amounts disbursed by the taxpayer in the year for meals and lodging

while employed by a railway company

(i) away from the taxpayer's ordinary place of residence as a relievingtelegrapher or station agent or on maintenance and repair work, or

(ii) away from the municipality and the metropolitan area, if there is one,where the taxpayer's home terminal was located, and at a location fromwhich, by reason of distance from the place where the taxpayermaintained a self-contained domestic establishment in which thetaxpayer resided and actually supported a spouse or a persondependent on the taxpayer for support and connected with the taxpayerby blood relationship, marriage or adoption, the taxpayer could notreasonably be expected to return daily to that place,

to the extent that the taxpayer has not been reimbursed and is not entitled tobe reimbursed in respect thereof;

Sales expenses(f) where the taxpayer was employed in the year in connection with theselling of property or negotiating of contracts for the taxpayer's employer,and

(i) under the contract of employment was required to pay the taxpayer'sown expenses,

(ii) was ordinarily required to carry on the duties of the employmentaway from the employer's place of business,

(iii) was remunerated in whole or part by commissions or other similaramounts fixed by reference to the volume of the sales made or thecontracts negotiated, and

(iv) was not in receipt of an allowance for travel expenses in respect ofthe taxation year that was, by virtue of subparagraph 6(1)(b)(v), notincluded in computing the taxpayer's income,

amounts expended by the taxpayer in the year for the purpose of earning theincome from the employment (not exceeding the commissions or other similaramounts referred to in subparagraph 8(1)(f)(iii) and received by the taxpayer inthe year) to the extent that those amounts were not

(v) outlays, losses or replacements of capital or payments on accountof capital, except as described in paragraph 8(1)(j),

(vi) outlays or expenses that would, by virtue of paragraph 18(1)(l), notbe deductible in computing the taxpayer's income for the year if theemployment were a business carried on by the taxpayer, or

(vii) amounts the payment of which reduced the amount that would

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otherwise be included in computing the taxpayer's income for the yearbecause of paragraph 6(1)(e);

Transport employee'sexpenses

(g) where the taxpayer was an employee of a person whose principalbusiness was passenger, goods, or passenger and goods transport andthe duties of the employment required the taxpayer, regularly,

(i) to travel, away from the municipality where the employer'sestablishment to which the taxpayer reported for work was located andaway from the metropolitan area, if there is one, where it was located,on vehicles used by the employer to transport the goods orpassengers, and

(ii) while so away from that municipality and metropolitan area, to makedisbursements for meals and lodging,

amounts so disbursed by the taxpayer in the year to the extent that thetaxpayer has not been reimbursed and is not entitled to be reimbursed inrespect thereof;

Travel expenses

(h) where the taxpayer, in the year,

(i) was ordinarily required to carry on the duties of the office oremployment away from the employer's place of business or in differentplaces, and

(ii) was required under the contract of employment to pay the travelexpenses incurred by the taxpayer in the performance of the duties ofthe office or employment,

amounts expended by the taxpayer in the year (other than motor vehicleexpenses) for travelling in the course of the office or employment, exceptwhere the taxpayer

(iii) received an allowance for travel expenses that was, because ofsubparagraph 6(1)(b)(v), 6(1)(b)(vi) or 6(1)(b)(vii), not included incomputing the taxpayer's income for the year, or

(iv) claims a deduction for the year under paragraph 8(1)(e), 8(1)(f) or8(1)(g);

Motor vehicle travelexpenses

(h.1) where the taxpayer, in the year,

(i) was ordinarily required to carry on the duties of the office oremployment away from the employer's place of business or in differentplaces, and

(ii) was required under the contract of employment to pay motor vehicleexpenses incurred in the performance of the duties of the office oremployment,

amounts expended by the taxpayer in the year in respect of motor vehicleexpenses incurred for travelling in the course of the office or employment,except where the taxpayer

(iii) received an allowance for motor vehicle expenses that was,

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because of paragraph 6(1)(b), not included in computing the taxpayer'sincome for the year, or

(iv) claims a deduction for the year under paragraph 8(1)(f);

Dues and otherexpenses of

performing duties

(i) amounts paid by the taxpayer in the year as

(i) annual professional membership dues the payment of which wasnecessary to maintain a professional status recognized by statute,

(ii) office rent, or salary to an assistant or substitute, the payment ofwhich by the officer or employee was required by the contract ofemployment,

(iii) the cost of supplies that were consumed directly in the performanceof the duties of the office or employment and that the officer oremployee was required by the contract of employment to supply andpay for,

(iv) annual dues to maintain membership in a trade union as defined

(A) by section 3 of the Canada Labour Code, or

(B) in any provincial statute providing for the investigation, conciliation orsettlement of industrial disputes,

or to maintain membership in an association of public servants the primaryobject of which is to promote the improvement of the members' conditions ofemployment or work,

(v) annual dues that were, pursuant to the provisions of a collectiveagreement, retained by the taxpayer's employer from the taxpayer's

remuneration and paid to a trade union or association designated insubparagraph 8(1)(i)(iv) of which the taxpayer was not a member,

(vi) dues to a parity or advisory committee or similar body, the paymentof which was required under the laws of a province in respect of theemployment for the year, and

(vii) dues to a professions board, the payment of which was requiredunder the laws of a province,

to the extent that the taxpayer has not been reimbursed, and is not entitled tobe reimbursed in respect thereof;

Motor vehicle andaircraft costs

(j) where a deduction may be made under paragraph 8(1)(f), 8(1)(h) or8(1)(h.1) in computing the taxpayer's income from an office or employmentfor a taxation year,

(i) any interest paid by the taxpayer in the year on borrowed moneyused for the purpose of acquiring, or on an amount payable for theacquisition of, property that is

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(A) a motor vehicle that is used, or

(B) an aircraft that is required for use

in the performance of the duties of the taxpayer's office or employment, and

(ii) such part, if any, of the capital cost to the taxpayer of

(A) a motor vehicle that is used, or

(B) an aircraft that is required for use

in the performance of the duties of the office or employment as is allowed byregulation;

Unemploymentinsurance premium

(k) (Repealed by S.C. 1988, c. 55, s. 2(1).)

Canada Pension Plancontribution

(l) (Repealed by S.C. 1988, c. 55, s. 2(1).)

C.P.P. contributionsand U.I.A. premiums

(l.1) any amount payable by the taxpayer in the year

(i) as an employer's premium under the employment Insurance Act, or

(ii) as an employer's contribution under the Canada Pension Plan orunder a provincial pension plan as defined in section 3 of the CanadaPension Plan,

in respect of salary, wages or other remuneration, including gratuities, paid toan individual employed by the taxpayer as an assistant or substitute to performthe duties of the taxpayer's office or employment if an amount is deductible bythe taxpayer for the year under subparagraph 8(1)(i)(ii) in respect of that

individual;

Employee's registeredpension plancontributions

(m) the amount in respect of contributions to registered pension plans that,by reason of subsection 147.2(4), is deductible in computing the taxpayer'sincome for the year;

Idem(m.1) (Repealed by S.C. 1990, c. 35, s. 2(2).)

Employee RCAcontributions

(m.2) an amount contributed by the taxpayer in the year to a pension planin respect of services rendered by the taxpayer where the plan is aprescribed plan established by an enactment of Canada or a province orwhere

(i) the plan is a retirement compensation arrangement,

(ii) the amount was paid to a custodian (within the meaning assigned bythe definition "retirement compensation arrangement" in subsection248(1)) of the arrangement who is resident in Canada, and

(iii) either

(A) the taxpayer was required, by the terms of the taxpayer's office oremployment, to contribute the amount, and the total of the amountscontributed to the plan in the year by the taxpayer does not exceed the total of

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the amount contributed to the plan in the year by any other person in respectof the taxpayer, or

(B) the plan is a pension plan the registration of which under this Act wasrevoked (other than a plan the registration of which was revoked as of theeffective date of its registration) and the amount was contributed in accordance

with the terms of the plan as last registered;

(C) (Repealed by S.C. 1994, c. 21, s. 4(2).)

Salary reimbursement(n) an amount paid by or on behalf of the taxpayer in the year pursuant toan arrangement (other than an arrangement described in subparagraph(b)(ii) of the definition "top-up disability payment" in subsection 6(17))under which the taxpayer is required to reimburse any amount paid to thetaxpayer for a period throughout which the taxpayer did not perform theduties of the office or employment, to the extent that

(i) the amount so paid to the taxpayer for the period was included incomputing the taxpayer's income from an office or employment, and

(ii) the total of amounts so reimbursed does not exceed the total ofamounts received by the taxpayer for the period throughout which thetaxpayer did not perform the duties of the office or employment;

Reimbursement ofdisability payments

(n.1) where,

(i) as a consequence of the receipt of a payment (in this paragraphreferred to as the "deferred payment") from an insurer, a payment (inthis paragraph referred to as the "reimbursement payment") is made byor on behalf of an individual to an employer or former employer of theindividual pursuant to an arrangement described in subparagraph (b)(ii)of the definition "top-up disability payment" in subsection 6(17), and

(ii) the reimbursement payment is made

(A) in the year, other than within the first 60 days of the year if the deferredpayment was received in the immediately preceding taxation year, or

(B) within 60 days after the end of the year, if the deferred payment wasreceived in the year,

an amount equal to the lesser of

(iii) the amount included under paragraph 6(1)(f) in respect of thedeferred payment in computing the individual's income for any taxationyear, and

(iv) the amount of the reimbursement payment;

Forfeited amounts(o) where at the end of the year the rights of any person to receive benefitsunder a salary deferral arrangement in respect of the taxpayer have beenextinguished or no person has any further right to receive any amountunder the arrangement, the amount, if any, by which the total of alldeferred amounts under the arrangement included in computing thetaxpayer's income for the year and preceding taxation years as benefits

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under paragraph 6(1)(a) exceeds the total of

(i) all such deferred amounts received by any person in that year orpreceding taxation years out of or under the arrangement,

(ii) all such deferred amounts receivable by any person in subsequent

taxation years out of or under the arrangement, and

(iii) all amounts deducted under this paragraph in computing thetaxpayer's income for preceding taxation years in respect of deferredamounts under the arrangement;

Idem(o.1) an amount that is deductible in computing the taxpayer's income forthe year because of subsection 144(9);

Musical instrumentcosts

(p) where the taxpayer was employed in the year as a musician and as aterm of the employment was required to provide a musical instrument for aperiod in the year, an amount (not exceeding the taxpayer's income for theyear from the employment, computed without reference to this paragraph)equal to the total of

(i) amounts expended by the taxpayer before the end of the year for themaintenance, rental or insurance of the instrument for that period,except to the extent that the amounts are otherwise deducted incomputing the taxpayer's income for any taxation year, and

(ii) such part, if any, of the capital cost to the taxpayer of the instrumentas is allowed by regulation; and

Artists' employmentexpenses

(q) where the taxpayer's income for the year from the office or employmentincludes income from an artistic activity

(i) that was the creation by the taxpayer of, but did not include thereproduction of, paintings, prints, etchings, drawings, sculptures or

similar works of art,

(ii) that was the composition by the taxpayer of a dramatic, musical orliterary work,

(iii) that was the performance by the taxpayer of a dramatic or musicalwork as an actor, dancer, singer or musician, or

(iv) in respect of which the taxpayer was a member of a professionalartists' association that is certified by the Minister of Canadian Heritage,

amounts paid by the taxpayer before the end of the year in respect ofexpenses incurred for the purpose of earning the income from those activities

to the extent that they were not deductible in computing the taxpayer's incomefor a preceding taxation year, but not exceeding a single amount in respect ofall such offices and employments of the taxpayer equal to the amount, if any,by which

(v) the lesser of $1,000 and 20% of the total of all amounts each ofwhich is the taxpayer's income from an office or employment for theyear, before deducting any amount under this section, that was incomefrom an artistic activity described in any of subparagraphs 8(1)(q)(i) to

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(iv),

exceeds

(vi) the total of all amounts deducted by the taxpayer for the year underparagraph 8(1)(j) or (p) in respect of costs or expenses incurred for the

purpose of earning the income from such an activity for the year.

General limitation (2) Except as permitted by this section, no deductions shall be made incomputing a taxpayer's income for a taxation year from an office oremployment.

Limitation reemployment expensededuction

(3) (Repealed by S.C. 1988, c. 55, s. 2(3).)

Meals (4) An amount expended in respect of a meal consumed by a taxpayerwho is an officer or employee shall not be included in computing the amount ofa deduction under paragraph 8(1)(f) or 8(1)(h) unless the meal was consumedduring a period while the taxpayer was required by the taxpayer's duties to be

away, for a period of not less than twelve hours, from the municipality wherethe employer's establishment to which the taxpayer ordinarily reported for workwas located and away from the metropolitan area, if there is one, where it waslocated.

Dues not deductible (5) Notwithstanding subparagraphs 8(1)(i)(i), 8(1)(i)(iv), 8(1)(i)(vi) and8(1)(i)(vii), dues are not deductible under those subparagraphs in computing ataxpayer's income from an office or employment to the extent that they are, ineffect, levied

(a) for or under a superannuation fund or plan;

(b) for or under a fund or plan for annuities, insurance (other than

professional or malpractice liability insurance that is necessary to maintaina professional status recognized by statute) or similar benefits; or

(c) for any other purpose not directly related to the ordinary operatingexpenses of the committee or similar body, association, board or tradeunion, as the case may be.

"Contribution limit"defined

(6) (Repealed by S.C. 1990, c. 35, s. 2(5).)

Teachers (7) (Repealed by S.C. 1990, c. 35, s. 2(5).)

Employees'contributions topension fund for

arrears

(8) (Repealed by S.C. 1990, c. 35, s. 2(6).)

Presumption (9) Notwithstanding any other provision of this Act, the total of all amountsthat would otherwise be deductible by a taxpayer pursuant to paragraph8(1)(f), (h) or (j) for travelling in the course of the taxpayer's employment in anaircraft that is owned or rented by the taxpayer, may not exceed an amountthat is reasonable in the circumstances having regard to the relative cost andavailability of other modes of transportation.

Certificate of employer (10) An amount otherwise deductible for a taxation year under paragraph

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(1)(a), (f), (h) or (h.1) or subparagraph (1)(i)(ii) or (iii) by a taxpayer shall not bededucted unless a prescribed form signed by the taxpayer's employercertifying that the conditions set out in that paragraph or subparagraph, as thecase may be, were met in the year in respect of the taxpayer is filed with thetaxpayer's return of income for the year.

Goods and services

tax(11) For the purposes of this section and section 6, the amount of any

rebate paid or payable to a taxpayer under the Excise Tax Act in respect of thegoods and services tax shall be deemed not to be an amount that isreimbursed to the taxpayer or to which the taxpayer is entitled.

Forfeiture of securitiesby employee

(12) If, in a taxation year,

(a) an employee is deemed by subsection 7(2) to have disposed of asecurity (as defined in subsection 7(7)) held by a trust,

(b) the trust disposed of the security to the person that issued the security,

(c) the disposition occurred as a result of the employee not meeting the

conditions necessary for title to the security to vest in the employee, and

(d) the amount paid by the person to acquire the security from the trust orto redeem or cancel the security did not exceed the amount paid to theperson for the security,

the following rules apply:

(e) there may be deducted in computing the employee's income for theyear from employment the amount, if any, by which

(i) the amount of the benefit deemed by subsection 7(1) to have beenreceived by the employee in the year or a preceding taxation year in

respect of the security

exceeds

(ii) any amount deducted under paragraph 110(1)(d) or (d.1) incomputing the employee's taxable income for the year or a precedingtaxation year in respect of that benefit, and

(f) notwithstanding any other provision of this Act, the employee's gain orloss from the disposition of the security is deemed to be nil and section 84does not apply to deem a dividend to have been received in respect of thedisposition.

Work space in home (13) Notwithstanding paragraphs 8(1)(f) and 8(1)(i),

(a) no amount is deductible in computing an individual's income for ataxation year from an office or employment in respect of any part (in thissubsection referred to as the "work space") of a self-contained domesticestablishment in which the individual resides, except to the extent that thework space is either

(i) the place where the individual principally performs the duties of the

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office or employment, or

(ii) used exclusively during the period in respect of which the amountrelates for the purpose of earning income from the office oremployment and used on a regular and continuous basis for meetingcustomers or other persons in the ordinary course of performing the

duties of the office or employment;

(b) where the conditions set out in subparagraph 8(13)(a)(i) or 8(13)(a)(ii)are met, the amount in respect of the work space that is deductible incomputing the individual's income for the year from the office oremployment shall not exceed the individual's income for the year from theoffice or employment, computed without reference to any deduction inrespect of the work space; and

(c) any amount in respect of a work space that was, solely because ofparagraph 8(13)(b), not deductible in computing the individual's income forthe immediately preceding taxation year from the office or employmentshall be deemed to be an amount in respect of a work space that is

otherwise deductible in computing the individual's income for the year fromthat office or employment and that, subject to paragraph 8(13)(b), may bededucted in computing the individual's income for the year from the officeor employment.