Do Commission Employees Get Any Tax Breaks?

Commission employees tax breaks

In today’s job economy a lot of people are taking on commission type jobs.   By doing so they often run up a certain amount of expenses in order to earn the money that the commission will be based on.

If the individual in this situation is not fully aware of which type of expenses they are allowed to deduct then they can end up paying more in taxes.

You must be sure before you start claiming expenses that you meet the criteria of a commissioned employee.

In your contract of employment as a commissioned employee it must be agreed upon that you are responsible for your own expenses.

Your job responsibilities must be such that you are working outside of your employer’s place of employment.

The commissions you received  whole or in part were based on sales.

As part of your agreement you did not receive a non taxable allowance for your travelling expenses.

You may need to hire a quality tax accountant to help you prepare your taxes, as these can be a little complex for the commissioned employee.   The amount you pay for these services is an expense that you can claim.   Also, if you have run into some legal problems pertaining to the collection of your commissions then this too may be an expense you can use against your taxes.   There are some specific criteria with respect to this particular claim for expense, and your tax preparer should be able to assist you with this.

Be sure that you have a copy of the Declaration of Conditions for Employment which is Form T2200.   This must have been filled out and signed by your employer.

If you are new to commission payments it is well worth using an accountant to assist you with your taxes.   Even if you are not sure if something can be claimed as an expense it is worth keeping a receipt.   This way if it is an allowable expense you have the proper documentation to support your tax claim expense.   Ideally seeking out the advice of a tax accountant as soon as you take on a commissioned job will go a long way in preparing you for your tax obligations and making sure you are going to get the tax breaks that come with this type of income.


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Sam Seidman, CPA, CA, LPA
629 Sheppard Avenue West
Toronto, Ontario
M3H 2S3

Telephone: (416) 398-1700
Fax: (416) 398-6226

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