IF YOU earn commissions,
you may qualify for tax
deductions not ordinarily
available to other
employees.

“To claim these tax breaks,’’
said Elio Luongo, senior tax
manager with Peat Marwick
Thorne, chartered accountants,

\ _ “tyou must be employed in selling

property or negotiating contracts
on behalf of your employer and
be earning a commission related
to your sales volume or the con-
tracts negotiated.

**You must be required to pay
your own expenses under your
contract of employment and nor-
mally conduct your work away
from, your employer’s place of
business.” .

You may claim most of the ex-
penses you incur to earn your
commission income, although
generally the total expense claim
must be no more than your total
commissions.

Luengu noted one - exception:
‘You may use any loss: caused by
claiming the interest and deprecia-
.tion costs on- the business use of
your vehicle .to reduce other
‘employment income, .

The ru'es abcut claiming car
expenses are complex; see your
accountant to determine the best
approach to use in your situation.

If you choose to claim only
travel expenses (that is, you don’t
deduct advertising, promotion,
office, ctc., expenses), then you
-may claim ali travel expenses
regardless of your total commis-
sion income.

(Note that these tax tips.may or
-may not apply to your situation,
so you should seek expert advice
in your ¢wn tax planning. And
always review tie rules, which
change with dismz sing regularity.)

Here, from Luongo, is a list of
common deductions. Be sure you
keep careful records including all
receipts -—- although you don’t
. need to send them in with your
- tax return.

@ Advertising,. Promotion. This

includes promotional gifts 2. well

as advertising, business cards and

Paul Milley
BSc, C.L.U., C.H.EC.

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Revenue Canada changing
commission-earner rules

Michael
Grenby

DOLLARS AND SENSE

so on. If you need to entertain
clients es a condition of your
employment, you may deduct
meals, tickets and the cost of
sporting events and entertainment.
However, you may deduct only
80% of these entertainment ex-
penses, which must be ‘‘reason-
able in the circumstaaces.’”

@ Office Equipment. If you lease
your cellular phone, computer,
answering machine or other such
equipment, you may claim the
business use portion of these
amounts on your tax return.

But if you own these items, you
may claim NO capital cost allow-
ance (depreciation) or interest on
any loans taken out to buy this
equipment. So you should always
compare the final, after-tax bot-
tom line before you decide to buy
or lease. .

You may deduct supplies like

stamps, stationery, pens and so on
if they are used for business pur-
poses — but you aren’t allowed to
deduct the cost of calculators,
briefcases or special clothing.
@® Home Office. Calculate the
deductible portion of expenses like
electricity, water, property taxes
and home insurance by comparing
the size of the office to the size of
the whole home.

You may deduct rent — but
NOT mortgage interest or
depreciation if you own your

688-7208

DESIGNATED }
DRIVER.

home. Nor may you claim the cost
of basic phone service — even if
you do use the phone for business
although you may claim
business long-distance calls.

Note: Revenue Canada is
changing the rules for commission
earners, allowing deductions only
if you do most of your werk at
home and use your home office
on a ‘regular and continuous
basis for meeting customers or
other persons’ as part of earning
commission income.

You may not claim home office
expenses to create or increase a
loss, although then carrying for-
ward is allowed.

@ Assistants. When you hire an
assistant or substitute, you may
deduct the salary you pay.
Rememeber to remit payroll
deductions. And you may claim
the employer part of the CPP and
UIC premiums you are required to
pay.

@ Room and Board. If you must
travel away from your employer’s
normal place of business and pay
your own expenses, you may
claim meals and accommodaiion.

For meals, you must be away at

least 12 hours from the
municipality or metropolitan area
in which your employer is located;
again the 80% deductibility limit
applies. :
@ Courses. You may claim the
costs as long as you do not receive
a lasting benefit from the course.
So a course on current market
trends would be deductible while a
degree or diploma program would
not.

However, you might be able to
claim the latter under tuition fees.
in general, you may deduct the
cost of a course that maintains,
upgrades or improves existing
skills or qualifications relating to
your work.

Mike Grenby is a North
Shore-based columnist and- in-
dependent financial adviser who
works with individuals; he will
answer your questions as space
allows — write to him c/o The
North Shore News, 1139 Lonsdz'e
Ave., -North Vancouver
2H4, :

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