T777 Employment Expenses: What Remote Workers and Employees Can Claim

Self-employed Canadians file the T2125 to claim business expenses. But what if you are a salaried or commission employee who pays for work-related costs out of pocket? That is where the T777, Statement of Employment Expenses, comes in.

The T777 lets qualifying employees deduct certain expenses their employer required them to pay. The rules are more restrictive than for the self-employed, and there is a critical prerequisite: the T2200. This guide explains who qualifies, what you can claim, and how to calculate your deduction.

The T2200: Your Gateway to the T777

Before you can claim anything on the T777, you need a signed T2200 (Declaration of Conditions of Employment) from your employer. This form confirms that:

• Your employment contract required you to pay certain expenses
• You were required to work from a location other than your employer's office, or to travel for work
• You did not receive a reimbursement or non-taxable allowance for those expenses

Without a signed T2200, you cannot file a T777. Ask your employer to complete it early in the year. They are not legally obligated to provide one, but they cannot claim it as a deduction themselves if they do not reimburse you, so most will cooperate.

The T2200 specifies which types of expenses your employer required you to pay. You can only claim the categories checked off on the form.

T2200S: The Short Form

During and after the pandemic, the CRA introduced the T2200S, a simplified version for employees working from home. If your employer provides a T2200S instead of the full T2200, you can still claim home office expenses using either the detailed method or the flat rate method (if still available for the tax year in question). Check the CRA website for current eligibility.

Who Qualifies to Claim Employment Expenses?

You must meet all of these conditions:

1. You paid the expenses yourself as part of your employment duties.
2. Your employer required you to pay them (confirmed on the T2200).
3. You did not receive a reimbursement or non-taxable allowance.
4. The expenses are reasonable and directly related to earning employment income.

If your employer reimbursed you for any expense, you cannot also claim it on the T777.

Salaried Employees vs Commission Employees

The T777 draws a sharp line between salaried and commission employees. Commission employees can claim a broader range of expenses.

Expenses Available to Salaried Employees

Expense	Deductible?
Accounting fees for employment income	Yes
Legal fees to collect salary owed	Yes
Supplies consumed in work duties	Yes
Home office expenses (workspace-in-home)	Yes
Parking for work (not commuting)	Yes
Travel expenses (if required to travel)	Yes
Motor vehicle expenses (if required to use personal vehicle)	Yes
Meals while travelling (50%)	Yes
Phone and internet	Yes, if required by employer
Rent (if you rent your home)	Yes
Property taxes, home insurance	No
Client entertainment	No

Additional Expenses Available to Commission Employees

Commission employees can claim everything salaried employees can, plus:

Expense	Deductible?
Food, beverages, and entertainment for clients (50%)	Yes
Advertising and promotion	Yes
Rent on office or workspace	Yes
Home insurance (workspace portion)	Yes
Property taxes (workspace portion)	Yes
Hiring an assistant or substitute	Yes

Important: Commission employees' total deductions for certain categories cannot exceed their commission income. This cap prevents employees from creating a loss using these additional deductions.

Home Office Expenses: The Detailed Method

To claim home office expenses, you must meet one of these conditions:

• Your home is where you primarily (more than 50% of the time) perform your employment duties, OR
• You use the workspace exclusively to earn employment income, and you use it regularly and continuously to meet clients, customers, or other people in the course of work

Calculating Your Home Office Portion

Determine the percentage of your home used for work:

Method 1 — Square footage: Workspace area / Total home area = Business-use percentage

Method 2 — Number of rooms (if rooms are similar sizes): Rooms used for work / Total rooms = Business-use percentage

Example: Your dedicated home office is 120 sq ft in a 1,000 sq ft apartment. Your business-use percentage is 12%.

Eligible Home Office Expenses (Salaried)

Apply your business-use percentage to:

• Electricity
• Heat
• Water
• Internet access (employment portion)
• Maintenance and minor repairs to the home
• Rent (if you rent your home)

Not eligible for salaried employees: Property taxes, home insurance, and mortgage interest. Only commission employees can claim those.

Eligible Home Office Expenses (Commission)

Commission employees apply the same percentage to all of the above, plus:

• Property taxes
• Home insurance premiums

Neither salaried nor commission employees can claim mortgage principal, furniture, or capital expenses (like renovations) on the T777.

Vehicle Expenses for Employees

If your T2200 confirms you are required to use your personal vehicle for work (not just commuting to the office), you can claim motor vehicle expenses on the T777.

Eligible Vehicle Costs

• Fuel and oil
• Insurance
• Licence and registration fees
• Repairs and maintenance
• Lease payments (subject to CRA limits)
• Capital cost allowance (CCA) on the vehicle — commission employees only
• Parking for work duties (not at your employer's office)

Calculating Business Use

Track your total kilometres driven during the year and the kilometres driven for employment duties. Your deductible percentage is:

Employment km / Total km = Deductible percentage

Apply this percentage to your total vehicle costs.

Example: You drove 22,000 km total, of which 7,000 km were for work. Your business-use percentage is 31.8%. If your total vehicle expenses were $8,400, you can claim $2,671.

Critical note: Driving from home to your employer's office is commuting, not employment use. It does not count. Employment use includes driving between work locations, to client sites, or to other places your employer requires you to go.

CCA on Vehicles: Commission Employees Only

Salaried employees cannot claim CCA on their vehicle through the T777. Commission employees can, subject to the same Class 10 and Class 10.1 rules that apply to the self-employed.

The Logbook Requirement

The CRA expects you to maintain a logbook recording the date, destination, purpose, and kilometres for each employment trip. A full logbook for one complete year, combined with a three-month sample in subsequent years to confirm the pattern has not changed, is the CRA's recommended approach.

How to File the T777

1. Obtain your T2200 (or T2200S) from your employer.
2. Calculate each eligible expense using your receipts and records.
3. Determine your home office and vehicle percentages as described above.
4. Complete the T777 with the amounts for each expense line.
5. Report the total deduction on line 22900 of your T1 income tax return.

Keep the T2200 and all supporting receipts for at least six years. You do not submit the T2200 with your return, but the CRA can request it at any time.

Common Mistakes

• Filing without a T2200. The CRA will deny your claim without it.
• Claiming commuting costs as vehicle expenses. Home to office is personal, not employment use.
• Salaried employees claiming commission-only expenses. Property taxes, insurance, and CCA on vehicles are only available to commission employees.
• Double-dipping. If your employer reimbursed an expense or provided an allowance, you cannot also claim it.
• Forgetting the 50% meal limit. Meals while travelling for work are only 50% deductible.

Sources

1. CRA Guide T4044, Employment Expenses — The CRA's complete guide to employment expense deductions.
2. CRA Salaried and commission employees — Employment expenses — Overview of who can claim and what qualifies.
3. CRA Form T777, Statement of Employment Expenses — The form and its instructions.
4. CRA Form T2200, Declaration of Conditions of Employment — The employer declaration form required to file employment expenses.
5. CRA Employees working from home — Home office expenses — Specific guidance on home office deductions for employees.