When claiming employment expenses, an employee must ensure form T2200 is completed and signed by the employer. The T2200, a prescribed form pursuant to subsection 8(10) of the Income Tax Act, RSC 1985, c 1 (5th Supp) ("ITA"), requires the employer to provide information related to the employee's contractual conditions of employment.
For instance, did the contract of employment require the employee to pay for their own expenses? It is important this form is completed and signed by the employer and that the employee retains a copy. Otherwise, Canada Revenue Agency's ("CRA") default position will likely be that the employment expenses cannot be claimed to reduce taxable income.
What if Form T2200 is Missing?
In general, the form requires the employer to confirm multiple facts that indicate the employee was required to pay for expenses related to their position of employment. For example, did they have to travel between various business locations?
On the form itself, it reads that it does not have to be filed with the respective tax return, though it must be available if CRA requests same. But what if it is missing? Subsection 8(10) of the ITA states that employment expenses will not be accepted unless "a prescribed form, signed by the taxpayer's employer certifying that the conditions set out in the applicable provision were met in the year in respect of the taxpayer, is filed with the taxpayer's return of income for the year."
According to subsection 220(2.1) of the ITA, where "any provision of this Act or a regulation requires a person to file a prescribed form, receipt or other document, or to provide prescribed information, the Minister may waive the requirement, but the person shall provide the document or information at the Minister's request." A closer reading indicates the requirement to file the prescribed form with the respective tax return may be waived, versus the requirement to provide the completed and signed form upon demand.
However, there are certain circumstances where employment expenses will be allowed despite the missing form. In the decision of the Tax Court of Canada in Chao v. The Queen, 2018 TCC 72 (CanLII), paragraphs 83 to 102, the court discusses "the legal basis to conclude that filing the form [T2200] may not be necessary." Importantly, the taxpayer must demonstrate that the respective legal obligations were taken seriously, and they attempted to comply but could not do so because of circumstances beyond their control.
If an employer refused to complete the form "it would have to be shown that the employer acted unreasonably or in bad faith." More recently in Perron-Ali v. The Queen, 2021 TCC 6 (CanLII), the Tax Court, referencing the decision in Choa, remarked that the taxpayer would have to demonstrate that obtaining the form was an impossibility. They would also have to demonstrate their efforts to obtain it.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
