Background
I am not a tax accountant. I have taken Canadian tax accounting courses in a post-graduate environment, both within the scope of a Bachelor of Commerce degree and also in a Master's in Business Administration program. I am fairly comfortable with understanding and interpreting the tax code. However, I am not a certified tax professional. You should always consultant a professional tax accountant to answer questions about your personal taxation situation. You should only use the information on this page for initial guidance or background research to give yourself a better understanding of the broad basis upon which Canadian tax law is based.
Basic Assumptions & Terminology
Accounting rules in Canada generally adhere to GAAP, which is the Generally Accepted Accounting Principles framework. These rules (an international standard) are designed to bring about standardization and consistency in the ways in which accountants record all transactions.
With respect to taxes in Canada, there are two bodies of work which are important: the Canadian tax code (administered by the Canada Revenue Agency or CRA) and the framework of the legal system, which addresses both tort law and contract law.
There are different types of entities within Canada when it comes to taxes, including but not limited to corporations, non-profits, charities, partnerships, sole proprietorships, and individuals. It is unlikely that any tree planters could qualify to act as a sub-contractor (regardless of business structure) when working for a tree planting company. Any working relationship is almost certain to be that of employer and employee.
Canada's taxation laws cover issues such as who pays tax, property income, business income, employment income, investment income, and capital gains/losses. As already noted, employment income is the relevant category for individual tree planters. Canada's taxation laws also outline acceptable deductions from income.
A business can pick any arbitrary year-end date for their financial accounting purposes. This is typically the end of a month, but not always the end of December. Many businesses pick year-ends other than December to avoid the "rush season" for accounting work (February through April). Many businesses also attempt to pick a year-end that is during a "slow" part of the year, to minimize complexity for accounting. For example, a ski hill would find benefits from picking their year-end to recur on July 31st when things are quiet, rather than a year-end in December.
An individual does not get to pick their year-end. The taxation year for all individuals in Canada matches the calendar year. The year in question is referred to as the "tax year." T4's are generally required to be issued by all employers by the end of February of the year after the tax year. Income taxes generally need to be filed by approximately April 30th of the year after the tax year. Let's look at 2027 as a complex example. For the 2027 tax year, you can initially assume that all companies should issue T4's to all employees by February 28th of 2028, and individuals will be expected to file taxes by April 30th of 2028. But wait, 2028 is a leap year, so February has 29 days. Also, February 29th is a Saturday. Therefore in 2028, T4's need to be mailed out (postmarked) no later than March 2nd. In terms of the filing deadline, since April 30th of that year falls on a Sunday, individual taxes will need to be filed by 11:59pm on Monday, May 1st of 2028.
Avoidance vs Evasion, and Late Filing/Payment
Tax avoidance is good. Tax evasion is bad.
Tax avoidance is the pursuit of tax minimization which adheres to the legal tax framework. Individuals are encouraged to minimize their tax obligations. Accountants are expected to pursue or recommend all available legal tax avoidance strategies for their clients.
Tax evasion is the avoidance of tax obligations through illegal means, ie. through fraud or by making untruthful statements and declarations. Tax evasion is a criminal offense.
The terms tax evasion and tax avoidance both refer to the actions that you take when filling out your annual tax returns. They aren't related to paying any taxes that you owe after the initial payment date. Failure to pay your taxes is called tax delinquency. A balance owing that is past due is said to be in arrears.
As noted above, your annual tax filing is usually due on April 30th, four months after the end of any given taxation year. But what if you owe money, and don't have it? What happens if you don't file? That is always a bad idea. If you file late, the CRA assesses an immediate penalty of 5% of the balance owing, and for each additional month of delay, they add another 1% penalty up to a maximum of 12 months. So for example, if you file more than ten months after the deadline (and owe money), then the penalty is 5% for the first month and 1% for each additional month for a total of 14%. In addition, they charge interest on the balance owing (including the penalty amount). The penalties are even higher if you've filed late in any of the previous three years. Save yourself some money and file on time!
You may want to avoid filing if you can't pay off your balance owing in April. Make sure you file anyway! If you file, you avoid getting charged that large penalty! You are allowed to file without actually paying the balance owing at the same time. In that situation, all that the CRA will do is charge you interest on the amount owing, which is minor compared to the late-filing penalty.
If you are wondering what happens when you file without paying an outstanding balance, you'll eventually start getting letters from the CRA to remind you on a regular basis that you owe them money. Let's assume that you're a tree planter and you're broke at the end of the winter, but know that you'll start making money again in May. When you file (or after you file), you can send a letter to the CRA if you want, to explain your financial situation. I've learned that if you write to them and explain that you're starting work in May, and will be able to make a payment toward some or all of your balance owing by June 1st, they'll leave you alone until June. You can then pay off everything that you owe them with only a very minor amount of extra money to cover the interest charge for that one month.
If you fail to file by the filing deadline and the CRA owes you a refund, there is no late filing penalty. But then again, if they owe you a refund, why wouldn't you want to get that back as quickly as possible?
What Gets Taxed?
Over the years, people have referred to various types of income on tax returns, such as total income, gross income, net income, and taxable income. Some of these names relate to commonly used accounting terms which are used globally. Gross income and total income are usually fairly synonymous, usually meaning the same thing, ie. "all of your income." Net income usually refers to "gross incomes minus acceptable deductions." Taxable income usually refers to "the part of your income that gets taxed."
The Canada Revenue Agency made significant changes to the individual income tax return in 2019, especially when compared with the formats used in the previous few decades. Starting in 2019, the line numbers changed for a lot of the standard categories, and some of the names changed. The first main item is now called "Total Income for Tax Purposes." This refers to all of your income for the taxation year in question. The simplest way of thinking about this line is "all the money that you got, including everything that your employers say that you were paid." Each employer issues a T4 slip in February to sum up your wages. If you add up all of your T4's, the total will be included in the "Total Income for Tax Purposes." You also have to add in any EI benefits that you received (on your T4E slip), pension income, dividend income, interest & investment income, rental income, self-employment income, scholarships, and RRSP income. So actually, there are a lot of different types of income that all have to be added together to come up with your "Total Income for Tax Purposes." For many tree planters, employment income (T4's), EI benefits, and scholarships are the three main income sources.
After you've figured out your "Total Income for Tax Purposes," you're allowed to start deducting a lot of expenses. Some things that you're allowed to deduct include pension plan & RRSP contributions, union dues, child care expenses, moving expenses, "other employment expenses," and a few other minor categories. After you've deducted all of these times from your "Total Income for Tax Purposes," you get a new sub-total called the "Net Income Before Adjustments."
Once you have your "Net Income Before Adjustments," you have another adjustment opportunity. If you had to make any "social benefits repayments" (such as giving back EI to the government because they gave you too much), you get to remove that amount from your running total, and the new reduced sub-total is called your "Net Income for Tax Purposes." But we're not done yet. There are still more adjustments that will mostly benefit some Canadians. These aren't common items for planters, but here is where some people get to claim the northern residents deduction, Canadian Forces deduction, capital or non-capital losses from previous years, capital gains, etc. Once you remove any such applicable amounts, you're left with your "Taxable Income." This number is the most important, because this number is the number used when moving to the next step in calculating your annual taxes.
To sum up what I've just covered, you start by figuring out your total income, then you can potentially deduct a variety of expenses to come up with your taxable income (a lower number), and that taxable income is used for figuring out your actual tax obligation for the year.
Federal vs. Provincial Taxes
Now that we know how to figure out the dollar amount that you'll be taxed upon, we need to learn about tax rates (which are expressed in percentages).
For Canadians, income tax has two main components: the federal portion, and the provincial portion. Every Canadian is subject to the same rules for the federal portion. I'll use the 2020 tax year as an example. Your federal tax in 2020 is 15.0% of your first $48,535 of taxable income, then rises to 20.5% on your next $48,534 of taxable income. It then increases to higher rates in higher brackets.
The provincial component can vary from individual to individual, and is based solely upon the province that you lived in (your official residence) on December 31st of the year in question. If you live and work in several provinces during a particular year, you don't have to figure out a weighted average. Your deemed residency for the entire year is based upon there province that you officially lived in on December 31st, even if you only moved there two days before the end of the year. It doesn't matter if you didn't even work in that province.
Example: Let's assume that you're a resident of Ontario, and you live at home with your parents while attending university in Ontario (or live in residence, or have off-campus housing). Let's assume that you never have any employment in Ontario, not even a part-time job while you're at school, but you go planting for four months in BC in the summer. You will still pay taxes based on the Ontario rates, because that's where you officially lived on December 31st, the last day of the tax year.
Provincial tax rates can vary quite significantly. For example, in BC, you get taxed at 5.06% on your first $41,725 of taxable income, then at 7.7% on your next $41,726 of taxable income, then at higher rates on higher brackets. In Ontario, you get taxed at 5.05% on your first $44,740 of taxable income, then at 9.15% on your next $44,702 of taxable income, then at higher rates on higher brackets. Every province has its own set of tax brackets, and these usually vary from year to year.
You can easily look up the current federal tax rates and provincial tax rates for your own province. Do a google search for "tax rates federal provincial canada" and you'll get the most recent information.
Understanding Marginal Tax Rates and Annual Income Tax Obligations
One of the most frustrating "myths" with respect to taxation is the [false] belief that there comes a time when earning more money hurts you, because you lose more in taxes. This is NOT correct. This is because Canada has what's called a "progressive" tax system. The word progressive refers to the characteristic that as you earn more, your tax rate will eventually increase as you move into a higher tax bracket. However, the important thing to understand is that when you move into a higher tax bracket, it is only your marginal or incremental tax rate that increases. This means that the higher tax rate applies ONLY to the "extra" money within that higher tax bracket, NOT to your entire income.
Because income tax is split into both federal and provincial portions, as I outlined in the previous section, you have different sets of tax brackets for the federal and provincial components of your income tax. You run two separate sets of calculations to figure out dollar amounts for your federal and provincial taxes, and add those two numbers together to figure out your total tax obligation for the year.
Let's look at a hypothetical example. Let's pretend that you earned a total income of $65,000 from T4's in 2020, and you were a resident of BC. After subtracting your Basic Personal Amount and some other eligible expenses such as tuition, you ended up with exactly $41,730 of taxable income. We'll start with the provincial component. In BC in 2020, the tax rate was 5.06% on the first $41,725 of taxable income, and 7.7% on the next $41,726 of taxable income. Since you are reporting $41,730 of taxable income, you get taxed at a rate of 5.06% on almost all of it ($41,725) and you get taxed at a rate of 7.7% on the other five dollars. Therefore your provincial income tax is $2,111.92. Federal tax is 15.0% of your first $48,535 of taxable income, which means that all of your income is taxed at 15.0% for the federal component, which works out to $6,259.50. Add the federal and provincial amounts together and your total tax obligation for 2020 is $8,371.42. Based upon your initial Total Income of $65,000, this means that your effective annual combined federal/provincial tax rate for the year was about 12.88%, which is significantly less than the combined federal/provincial marginal rate of 22.7% (marginal federal rate of 15% and marginal provincial rate of 7.7%).
Here's a good video about marginal taxation, even though it uses US numbers: https://www.youtube.com/watch?v=6cRg9bnSnvg
Watch that video over and over again until you truly understand the concept of marginal taxes. It's incredibly important. Sure, you may have a moderately high combined tax rate of 15.0% federal plus 7.7% provincial (22.2% total) on taxable income over $40,000 if you live in BC. But that combined marginal rate of 22.2% applies ONLY to the upper end of your income, not to every dollar that you earn! You're still only subject to a lower tax rate on the majority of your annual income.
Did you know that if you draw EI in a given year, and you also earn more than a certain amount of "net income" for the year ($79,000 in 2024), and you have also received more than 1 week of EI benefits in any of the previous ten taxation years, then the government will claw back some of your EI? The exact amount is 30% of your net income over $79,000, to a maximum of the amount of your EI benefits for the year. Short version: Earn too much money, and you'll lose some (or all) of your EI. This is a fairly rare event, but it's possible for people who earn a lot of money during extended seasonal work.
Further down this page, I'll explain why an understanding of marginal taxation rates is so important.
Filling Out a TD1 Form
When you commence employment with a new (or seasonal) employer, you'll be asked to fill out a pair of TD1 forms. These two forms (each of which is a double-sided page) look pretty similar to each other, but they're not exactly the same. One form is your federal form, and the other is the provincial form. The provincial form will correspond to the province that your company is based on. This may be different than your province of residence! This is Ok. Even if you live in a different province, the CRA wants you to fill out the form for the province of employment. They know that sometimes this will lead to slightly incorrect tax withholding for your situation, especially if you are a resident of a different province, but they've accepted that inconsistency for the sake of simplicity. This is perhaps the only example I can think of where the CRA is complacent with simplicity. Any minor "errors" that arise from this geographic discrepancy are rectified at the end of the year when you fill out your full income tax form, so it is non-relevant in the long run.
Everyone in Canada gets a Basic Personal Amount that they're allowed to deduct from total income when calculating Taxable Income. In 2020, this amount is $13,229, no matter which province you live in. Basically, this deduction means that nobody in the country owes any income taxes for their first $13,229 in earnings in the 2020 taxation year.
When you fill out your TD1, there is a certain box that you can check (or leave blank), which affects your tax withholding for part of your season. This box is labelled as "Total income less than total claim amount." On the federal version of your TD1 form, the exact wording is as follows: "Check this box if your total income for the year from all employers and payers will be less than your total claim amount on Line 13. Your employer or payer will not deduct tax from your earnings." Follow the instructions. You probably shouldn't check this box if you aren't a student. Even a first-year tree planter will probably earn more than the "total claim amount" unless you happen to be a student and have a lot of eligible tuition expenses to offset against income. If you ARE a student, you may end up earning less than your total claim amount because your claim amount could be well over twenty thousand dollars (and some people don't earn that much in a regular planting season). If that's the case, then you should follow the instructions and check the box.
Let me go into more detail about that box. If you check it, your employer's payroll program should NOT withhold any income taxes from your cheques unless and until your year-to-date (YTD) gross earnings exceed the dollar amount on your "total claim amount" line. What does this mean? It means more money on your paycheques, and less money potentially being returned to you at tax time.
If you do NOT check that box, you'll have income tax withheld from your paycheques starting immediately. This results in less money being deposited to your bank account during the season. However, the bonus is that when you get your tax return, you'll probably get a lot more money back. Some people are happy to have a sudden chunk of cash in March from their tax return, since most planters are pretty broke at that time of year (especially students).
I must clarify once again that in the end, your annual tax obligation is calculated based upon total income for the year. There is no difference in the long term between paying more during the season and getting more back at refund time versus paying less during the season and getting a smaller refund (or owing money). In every case, you ultimately pay the same amount in the long term! The only difference occurs with respect to the timing of when you lose that money. If you have financial discipline, you are probably better off "keeping" a large amount with your paycheques, and running the risk of a lower return (or owing slightly) at tax time in March. This is because you can probably earn a small amount of interest by parking the money in a savings account. However, many planters are not that disciplined, so I understand why many people prefer to "pay" higher taxes during the season, and get a big refund in March.
The bottom line is that when you fill out your TD1, you should answer all questions truthfully based upon your individual guess of what is the "correct" answer, rather than trying to game the system. And if your answer turns out to be wrong later down the line, you won't be penalized for not knowing the correct answer or for filling the form out incorrectly. The system will eventually make a correction on your behalf. Ultimately, you will have the same tax obligation for the year, regardless of what you filled out on your TD1.
Tax Withholding
Companies can usually legally pick from a couple different formats for their regular pay periods. Depending on the province, some of the most commonly permitted pay periods are weekly (every 7 days), bi-weekly (every 14 days), and bi-monthly (twice per calendar month). Once a company decides upon a pay schedule, they must stick with it.
When it comes to income tax withholding, the goal of the payroll software is to calculate deductions so your total income tax withholding at the end of the year is very close to your actual tax obligation for the year. This is to make sure that regardless of whether you get a refund or have money owing when you do your taxes, the amount refundable or owed is as close to zero as possible. The CRA doesn't want to see situations where individuals have massive amounts owing or refundable at tax time.
When your employer's payroll program is trying to figure out how much tax to deduct from one of your paycheques, it can't figure out the proper answer. That's because there IS no correct final answer until after the tax year has ended. After a tax year has ended, you can figure out your exact tax obligation for that year, but until that point, anything that you do is just an educated guess. So if a payroll program doesn't know what your ultimate tax obligation is, how can it ever figure out the "right" amount to withhold from a specific paycheque? Well, obviously, it can't. It also has to guess, and it also tries to make an educated guess. Let me explain that process, because it is very important.
Your employer's payroll software only knows a few simple facts when it processes your paycheque. It knows your gross earnings for that specific pay period. It knows whether you checked the "total income less than claim amount" box on your TD1 (because when the accountant sets up your profile in the software, he/she enters that information). The payroll software also knows your specific estimated claim amount from line 13 of your TD1. This is enough to let the software make a guess at what should be withheld for taxes. The software ASSUMES (probably incorrectly) that you make approximately the same amount every pay period for the entire year. This is probably a valid assumption for 90% of people in the North American workforce, but it doesn't work out so well for people who get paid piece-rate or commissions. Anyway, the software looks at what you made in that specific pay period, and extrapolates to estimate approximately what you earn in a full year. If you made $2000 on a bi-weekly paycheque, then the software multiplies by 26 and assumes that you probably earn approximately $52,000 in a full year. It then figures out what the approximate annual taxes would be for someone who earns $52,000 in a year with your specific total claim amount, then divides that by 26 pay periods to come up with a dollar amount for your tax withholding on that specific paycheque. This approach is actually fairly accurate for someone who works year-round, even if their earnings vary slightly from paycheque to paycheque. Unfortunately though, for seasonal workers, this approach is usually quite incorrect.
Let me give you a very simple example. Let's pretend that you work for four pay periods, earning $2000 in each pay period, and the payroll software thinks that you need to have about $400 withheld in each pay period to come close to the "right" amount being withheld during the year. Over those four pay periods, you have a total of $1600 withheld for personal income taxes on $8000 in gross income. But let's also pretend that you decide to take an extended vacation, so you don't work for the rest of the year. Therefore, your total income at the end of the year is just that $8000 gross income. When you do your taxes the following March, your Basic Personal Amount (of $13,229) is much larger than your income, which means that you'll have zero for a tax obligation for that year, and you'll get a refund of the entire $1600 that was withheld. Pretty simple.
One of the reasons that I'm explaining this, other than for basic understanding of how taxes work, is to explain why you seem to have a disproportionately large amount of tax withholding in any pay period when you make an abnormally high amount of money. For example, maybe you make $2200 in one pay period and have $450 in income tax withholding, but then have a killer week and make $4400 in the next pay period. You're excited until you get your pay stub, when you become dismayed to see that there is $1400 in income tax withholding. Why do you lose an extra $950 when you've made $2200 extra? If your earnings doubled, why didn't your tax withholding also double to $900? Doesn't it seem like a MUCH higher proportion of money was withheld on the second $2200 compared to the first $2200? The "problem" relates to the way that the software estimates your long-term taxes. Let's assume that these are bi-weekly pay periods. So in the first example, the payroll software thinks that since you made $2200 in two weeks, you must earn about $57,200 in a full year, and after deductions it assumes that your tax liability will be $11,700 for the year. It then divides that $11,700 by 26 and assumes you should lose $450 in this pay period. But in the second example, the software assume that since you made $4400 in two weeks, you will probably earn about $114,400 in the full year (even though we all know that you're not going to be planting for 52 weeks) and then it decides that your annual tax obligation on $114,400 will be $36,400, so it divides by 26 and decides that your tax withholding in this specific pay period should be $1400.
Now that you know this, you'll understand why your tax seems to go up disproportionately quickly (and unfairly) when you earn more money in a pay period. But the good thing is that once tax time comes around, you'll get some of that money back. It's very unlikely that you'll actually earn $114,400 during the year. Here's where it is useful to understand your marginal tax rate. If you know that your combined federal and provincial marginal tax rates on the top part of your income add up to only 28.2%, then you know that the most you'll really owe on that $4400 is $1240.80, which means that you'll eventually get at least $159.20 of that $1400 back when you do your taxes. You can also think about your average effective tax rate for the year (which is always lower than your marginal rate). This is even more accurate for determining what you'll actually get back.
Some uneducated planters see extremely high taxes on a fat paycheque, and decide that it's not that worthwhile to try to make a lot of money. There have been several times where I've heard someone say, "I don't think I'm going to work on the last day of the pay period" or "I'm not going to put in that extra box at the end of the day" because they think they'll lose it all in taxes. That is a completely incorrect assumption. Thanks to Canada's progressive taxation system, and due to the fact that taxes are ultimately calculated on your true earnings for the full year, the most that you will ever lose on any "extra" earnings is the amount equivalent to your marginal tax rate. Moving up into a higher tax bracket ONLY affects the rate on the small portion of your income that falls within that bracket, not upon your entire earnings. It's ALWAYS worthwhile to try to put in that extra box of trees.
Incidentally, did you know that you can request your employer to withhold extra tax from some or all of your paycheques? It's not common, but I've seen instances where a planter was worried about having a large tax obligation the following March due to things such as large scholarships, and asked for an extra $100 per week of income tax to be withheld throughout the summer. The planters in these instances understood the tax system completely, and knew that if they ended up having "too much" tax withheld during the season, they'd get it back in the spring.
Options for Claiming Various Types of Employment-Related Expenses
There are generally three types of employment-related expenses that individuals may be able to use to offset some of their gross income, which can therefore reduce their net tax obligation. Depending on your individual circumstances and the expense path that your employer supports, you may be eligible for up to two of the three categories. Remote Work Allowance (RWA) and the T2200 Declaration of Employment Expenses are two different systems for declaring expenses incurred DURING your period of employment. An employer can support one or the other of these systems, but will not support both. An individual can not claim expenses under both systems. Therefore, it is important to determine if you are eligible for the system that your employer supports. Many planters are not eligible for RWA, so even if your employer supports that system, it may be of no benefit to you. Some individuals are not eligible for the T2200 Declaration, so even if your employer supports that system, it may be of no benefit to you. Some individuals are not eligible for either system. We'll talk about these systems in more detail shortly.
Separate from RWA and T2200's is the option to claim Moving Expenses. This category addresses expenses incurred in traveling TO a new job. There are certain eligibility criteria, so not all individuals are able to claim Moving Expenses. We'll talk about these in more detail further down the page.
Remote Worksite Allowance (RWA)
The RWA system (Remote Work Allowance) is used by some companies. There is a great deal of debate in the industry about whether or not this system is legitimately applicable to tree planters. Unfortunately, one of the key clauses of eligibility for RWA is that the claimant must be able to provide proof of maintaining a self-contained domicile elsewhere during the tree planting season. If you normally live with your parents, you are not eligible for RWA. If you do not own a house or have an apartment lease during the planting season, you are not eligible for RWA. If you live in a university residence during the academic year, you are not eligible for RWA. If you have an apartment but you sublet it during the planting season, you are not eligible for RWA. And finally, if you are staying in a planting camp that is provided by your employer, and it is located within 80 kilometers of a municipality with a population of 1,000 persons or greater, you are not eligible for RWA. Due to all of these restrictions, a large number of tree planters do not technically appear to be eligible for RWA.
There is also some debate about the concept of employer-provided "board and lodging" for employees that extends for a period of greater than 36 hours. If that clause includes a recognition that an employer-provided planting camp is recognized as "board and lodging," then camp-based tree planters should not be eligible for RWA regardless of distance from the closest community of 1,000 persons or greater.
For more information about RWA, check out this link:
Remote Worksite Allowance on the CRA Website
I am aware of planters who have been audited and who have had their RWA claims denied. I recommend that you seek the advice of a professional tax accountant before attempting to claim RWA on your tax return.
Employment at a Special Work Site
The "Special Work Site" designation is very similar to Remote Work Allowance, but broader. The definition of a Special Work Site is one that is more than 30 kilometers away from an urban center of more than 40,000 population.
Under the Special Work Site category, an employer can exclude certain benefits from income of, "an allowance (not in excess of a reasonable amount) for expenses for board and lodging provided by your employer at a special work site." The same "allowance" applies to transportation, although that part can be ignored because it is intended to address transportation between your principle residence and the Special Work Site, not between a camp/motel and the blocks.
All of the same caveats stipulating that a planter must maintain a self-contained domicile also apply to Special Work Sites.
One large question arises with respect to camp costs. If the employer is charging camp costs to employees, regardless of whether it is a camp or motel, the worker may again be ineligible for this deduction. The CRA would presumably look dimly upon a situation whereby an employer claims to be providing an allowance for room and board and at the same time is charging the worker for lodging or lodging/meals. Therefore, this tax reduction approach would be most suited for employees of companies that do not charge camp costs.
For more information about Special Work Sites, check out this link:
Again, if you given a Special Work Site allowance by your employer (ie. the employer declares part of your daily earnings to be regular income and part of your earnings to be a tax-free allowance) you may be at risk of having your claim denied during an audit, especially if the CRA determines that you are not able to prove eligibility based upon the self-contained domicile requirements. I recommend that you seek the advice of a professional tax accountant before attempting to claim the Special Work Site allowance deduction.
T2200 Declaration of Employment Expenses
The T2200 Declaration (and the associated Form T777) provides an alternative approach to claiming eligible employment expenses.
If you are employed by a company that issues a T2200, then you are allowed to fill out the T777 form when you complete your taxes. This may allow you to claim certain employment-related expenses and thus reduce your tax obligation. To learn more about exactly what you're allowed to claim, check out the following two links:
Casual Commentary on WealthSimple.com
Official Information from the CRA
I am aware of planters who have been audited and who have had their T2200 claimed denied. I recommend that you seek the advice of a professional tax accountant before attempting to claim Employment Expenses via T2200 on your tax return.
Moving Expenses
Generally, you can claim Moving Expenses in a tax year when two specific actions both occur: (1) You moved in order to start/continue employment, to run a business, or to study courses in full-time attendance at a designated post-secondary institution; AND (2) You moved at least 40 kilometers closer to your new job or school.
It is easiest to claim Moving Expenses if both your old residence and your new residence are located within Canada.
When determining what type of expenses qualify for Moving Expenses, most of the items in this list will qualify (with some restrictions): transportation and storage costs (packing, hauling, movers), travel expenses (vehicle expenses, airline tickets, accommodation, half of meal costs), temporary living expenses at destination (accommodations, half of meal costs), cost of cancelling a lease at your old residence, and incidental expenses (utility connect/disconnect fees).
The maximum dollar amount of Moving Expenses that can be claimed is equal to the amount of income that you earned at the new location. So for example, if you move across the country to take a job where you earn $15,000 and your travel expenses add up to $20,000, you can only claim a maximum of $15,000 of those travel expenses.
You can claim Moving Expenses for more than one move in a taxation year, as long as all of the above conditions are met for each move.
Example 1: You work at a ski hill in Ontario each winter, and spend the summers working in a planting camp in BC. You make more than ten thousand dollars at each job. You fly back and forth, and the tickets are $400 each direction. You can claim Moving Expenses twice during each taxation year. You will be able to claim the entire value of your airfare in each direction, since you have income after each move, and each move is more than 40 kilometers.
Example 2: You plant trees in BC each summer, and go to school in Toronto from September to April each year. You drive back and forth, taking your time, and each trip across the country costs you $1200 in fuel and accommodations. You do not work part-time while you're in school. You have a $500 recurring scholarship at your school. You can claim Moving Expenses for the full amount of the $1200 that it costs you to move out to BC to plant for the summer, since you earn much more than $1200 at that job. Since you don't have earnings from a job while at university, your options are limited for claiming Moving Expenses on the trip back to Ontario. However, a scholarship counts as earned income in the new location, so you can claim $500 of the $1200 that it cost you to move back to Ontario as Moving Expenses (the value of the scholarship).
It is important to know that the CRA will not allow a claim for expenses for a "temporary" move. So if you don't have a permanent address at both ends of your move, your claim will likely be disallowed during an audit. If you move from a permanent residence in Ontario to a permanent residence in BC for a planting season, then a claim for Moving Expenses may be appropriate. If you flew out to BC and lived in a tent camp all summer, then returned to your previous address at the end of the summer, an audit will probably result in your claim being disallowed. It is also important to know that leaving one permanent residence and then returning to that same address again may result in your claim being disallowed, as this might be interpreted as situation of temporary accommodation rather than a move.
Save all receipts, document everything, and make extensive written notes about your trip/move to store with those receipts. All of this documentation needs to be saved for 7 years, in case you get audited. If you are audited within that 7 year period, and you cannot provide acceptable receipts and documentation, you will be required to pay taxes on the amount that you claimed. An unused portion of a claim for Moving Expenses can be used in the subsequent year.
Final Thoughts
Tax laws in Canada change frequently. Never assume that the tax laws for any given taxation year are the same as the rules for the previous year. If seeking advice relating to tax planning and the preparation of your annual tax filings, your should always consult a tax professional. All information on this page was prepared on a best-efforts basis. The information contained on this page should not be considered to be direct tax advice. The author of this page (Jonathan Clark) hereby disclaims any liability to any party for any loss, damage, or disruption caused by errors or omissions, whether such errors or omissions result from negligence, accident, external factors, or any other cause. You should do your own research and consult a tax professional before relying on any of the information found on this page.