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What can servers deduct at tax time in Canada?

I got a good questions from a server recently and thought I’d share the answer with everyone, since I’m sure there are lots of you out there wondering the same thing.

“Hi!  Came across your site randomly and really appreciate what you do!  I am a server and I’ve always wanted to know, but didn’t know how to find out about what servers can write off at the end of the year as expenses.  I’ve heard that we can write off clothing, toiletries, haircuts, etc, whatever we spend on our appearance as it is part of the job.”

Well, I’m afraid I have a whole lot of bad news and only $160 worth of good.

Servers are in most cases employees, and employees are usually not allowed to write off any of these things. If they could write off things that “enhance their appearance” than any office worker could also argue that, because they have to wear suits to work, they should be allowed to write off the cost of their clothing. This is not the case. Employees are expected to pay their own costs for clothing and uniforms. In other words, looking good is not tax deductible.

To offset these types of costs, all employees are allowed to claim the “Canada Employment Amount, which is a non-refundable tax credit. In 2011 this was 15% of $1,065 (which equals about $160 in your pocket). Strictly self-employed people cannot claim this amount.

Special exceptions for other types of employees:

If you are a commissioned salesperson, or your employer requires you to pay certain job-related expenses AND they have given you a form T-2200 specifying what these expenses are, you may be entitled to claim some deductions on your tax return under Form T777: Statement of Employment Expenses.

However, I can’t see this happening much with an employee who is a server. And did I say I only had $160 worth of good news? Sorry, I meant $159.75.

October 18, 2012 - Posted by | Personal Tax, Random Questions | , ,

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