Employment Expenses: What Employees Can Deduct in Canada

This page covers costs an employee pays for work and whether they can be deducted. Each section below covers one kind of cost. Home office, car and tools expenses have their own pages, linked below.

Cell phone expenses

Cell phones are essential work tools for most Canadians, and CRA allows you to deduct the work-use portion of your cell phone costs if you meet the conditions. This page covers who can claim, how to work out your work-use percentage, what you can deduct (plan, hardware and home internet) and what records CRA asks for. It is one of the work-related claims in our guide to Canadian tax deductions and credits.

Who can claim cell phone expenses?

Employees

You can claim the work-use portion of your cell phone bill if:

1. You are required to use your own phone as a condition of employment (not just convenient)
2. Your employer has signed a T2200 confirming this
3. You were not reimbursed by your employer for the cost

Claim the deduction on Form T777 → Line 22900 (Other employment expenses) of your T1.

Self-employed individuals

You can claim the business-use portion of your cell phone bill as a business expense on Form T2125 (Statement of Business or Professional Activities), and no employer form is required, whereas employees need a signed T2200. You simply need to track and document your usage split; the T2125 guide shows where the expense goes on the form.

How to calculate your business-use percentage

CRA does not prescribe an exact methodology, but expects a reasonable, defensible estimate based on actual usage. Common approaches:

Method 1: Time-based estimate

Track how many hours per day you use your phone for work vs. personal purposes over a representative week. Calculate the ratio.

Example: 6 work hours out of 10 daily usage hours = 60% business use

Method 2: Call/data analysis

Review your phone bill for a few months. Estimate the percentage of calls made to business contacts, business apps, email, etc.

Method 3: Separate phones

If you maintain a dedicated business phone and a personal phone, you can claim 100% of the business phone plan. This is the cleanest approach and eliminates estimation risk.

What you can deduct

Calculation example

Self-employed, 65% business use, monthly plan $80:

Documentation to keep

• Copies of monthly phone bills, showing total charges and your payment
• Your business-use calculation: a brief written note or spreadsheet showing how you arrived at your percentage
• T2200 (if employee), which must be on file before filing
• Retain records for 6 years from the filing date

Common mistakes

• Claiming 100% on a personal phone: CRA flags this regularly; almost no personal phone is 100% business
• Claiming the phone hardware as an immediate deduction, when it should generally be capitalized under CCA
• Employees claiming without a T2200: the claim will be denied on audit
• Double-dipping when employer partially reimburses: only claim the unreimbursed portion

Home internet: can you also deduct it?

Yes, but the same work-use percentage logic applies. Employees with a T2200 can deduct the work-use portion of home internet (not cell phone) on Line 22900. Self-employed individuals claim it on T2125. Home internet is usually claimed along with the rest of your workspace costs: see the home office deduction for employees or, if you are self-employed, business-use-of-home expenses.

If your internet provider bundles phone and internet into one bill, separate the amounts as best you can. Most providers show the per-service breakdown.

Phone hardware: which CCA class?

Cell phones fall under Class 8 (20% declining balance CCA), the catch-all category that also covers fax machines and other electronic communications equipment. Class 10 (30% declining balance) is for general-purpose computer hardware and systems software, plus motor vehicles, and does not apply to cell phones.

The half-year rule applies in the year of acquisition, so you can only claim half the normal CCA in the first year. If a phone costs more than $1,000, you can elect to place it in a separate Class 8 pool so it depreciates on its own five-year schedule rather than being pooled with other Class 8 assets.

How CRA audits cell phone claims

If CRA audits your cell phone deduction, they typically ask for:

1. Phone bills for the claim period (12 months)
2. Your work-use calculation: a written explanation of how you arrived at the percentage
3. T2200 if you are an employee
4. Confirmation you were not reimbursed by your employer
5. For self-employed: evidence of business use (client contacts, work-related calls list, business email/app usage)

CRA does not accept claims based on “estimation” without any supporting methodology. Write down how you calculated your percentage at the time of filing and keep it with your tax records.

Other work expenses claimed the same way

Employees who drive their own car for work claim it on the same T777 and T2200 under the rules for car expenses as an employee. Apps and software used for work follow the rules on which subscriptions you can deduct, and the self-employed can find the full expense list in the guide to self-employed tax deductions.

Gym memberships

The gym membership question is one of the most searched tax questions in Canada, and one with a clear, if disappointing, answer for most people. This page explains why fitness costs are personal expenses, the narrow exceptions (fitness professionals, employer facilities, prescribed therapy, disability supports) and the provincial children’s activity credits. It is one of the everyday questions answered in our guide to Canadian tax deductions and credits.

The short answer: gym memberships are not tax deductible for most Canadians

CRA treats gym memberships as a personal expense. Personal expenses are not deductible against employment income, business income, or any other income category, regardless of how essential you feel fitness is to your productivity.

This applies whether you are:

• A salaried employee
• A self-employed freelancer
• A small business owner
• Incorporated

Exceptions: when fitness costs can be claimed in Canada

1. Professional athlete or personal trainer (self-employed)

If your occupation requires physical fitness as a direct job requirement (not just generally helpful, but specifically required), you may be able to deduct fitness costs as a business expense. CRA has accepted gym memberships as deductible for:

• Professional athletes (NHL, CFL, CBA players)
• Personal trainers (the gym is their workplace)
• Fitness instructors who use memberships to stay certifiable

For this to hold, the expense must be primarily for business purposes, and CRA can ask you to document the connection to income-earning activities in an audit.

2. Employer-paid on-site or subsidized fitness facility

Under CRA administrative policy (Income Tax Folio S2-F3-C2), employer-provided recreation facilities or employer-paid memberships where:

• The facility is available to all employees (not just select individuals), and
• The employer’s primary purpose is employee benefit broadly

…may be treated as a non-taxable benefit. This typically applies to on-site corporate gyms, not reimbursements for individual commercial gym memberships. If your employer reimburses your personal gym fee, it is generally a taxable benefit that increases your income, and you cannot then also deduct it. How employer-paid perks are taxed is covered in what taxable benefits are.

3. Medical expense tax credit (narrow cases)

The medical expense tax credit covers eligible medical expenses above a threshold based on your net income; that page has the threshold and the full list of eligible costs. Gym costs may count if:

• A licensed medical practitioner prescribed a fitness program as treatment for a specific condition
• You have written documentation of the prescription and the medical necessity
• The payments are to a practitioner or registered facility, not just a commercial gym

This is a genuine grey area, and documentation of the prescription matters if your situation involves prescribed exercise therapy.

4. Disability supports deduction (line 21500)

Individuals with a disability may be able to claim certain physical activity costs as disability supports if the activity is required to allow the individual to work or attend school. This is narrow and must meet CRA’s definition of eligible disability supports.

Provinces with children’s fitness credits

Note: These provincial credits apply only to children’s registered fitness/activity programs, not adult memberships, and their refundability varies – Manitoba’s Children’s Arts and Cultural Activity Tax Credit is non-refundable, while Yukon’s Children’s Fitness Amount is refundable. No province offers a general adult fitness tax credit.

What you can claim instead (related fitness-adjacent deductions)

Business equipment goes with your other expenses on Form T2125. For people with a disability, the Disability Tax Credit is a separate credit with its own eligibility test.

What CRA actually says in published guidance

CRA has published interpretation bulletins and income tax folios on this subject. The relevant guidance (Income Tax Folio S2-F3-C2) addresses employer-provided benefits including recreation facilities. The core rule is unchanged across decades of guidance: gym memberships and personal fitness costs are personal expenditures under paragraph 18(1)(h) of the Income Tax Act and are not deductible unless they meet a business or employment expense test.

The most common search that leads here is “can a business pay for my gym membership?” The answer: a business can pay for it, but it becomes a taxable employment benefit that shows up in Box 40 of your T4. You then pay tax on it. The net result is no deduction and a higher tax bill, unless the employer provides access to an on-site, all-employee facility.

Where the same money does get a tax break

For comparison, contributions to registered accounts do carry a tax effect:

• RRSP contribution: $1,200 at a 40% marginal rate saves $480 in taxes (RRSP guides)
• FHSA contribution: deductible like an RRSP, plus a potential tax-free home purchase (FHSA guides)
• TFSA: no deduction, but $1,200 grows completely tax-free (TFSA guides)

Other subscriptions people ask about, from software to streaming, are sorted in which subscriptions you can deduct, and courses in which education expenses you can deduct. If you are self-employed, the guide to self-employed tax deductions sets out the business-expense test in full.

Meals

Meals and entertainment are among the most frequently claimed, and most frequently disallowed, business expenses in Canada. CRA’s 50% rule is well known, but many people misunderstand what actually qualifies. This page covers the 50% limit, the tests a meal must pass, the exceptions where more is deductible, the narrower rules for employees and the records CRA expects. It is one of the work-expense questions answered in our guide to Canadian tax deductions and credits.

The 50% rule: what it means

Under Section 67.1 of the Income Tax Act, the cost of food, beverages, and entertainment is only 50% deductible, even when it qualifies as a legitimate business expense.

This applies to:

• Restaurant meals with clients, customers, or business associates
• Food and drinks at business events
• Tickets to sporting events, concerts, or theatre when used for client entertainment
• Gratuities (tips) on qualifying meals

The 50% cap is applied after you calculate the business-use portion. So if a client dinner cost $200, you can only include $100 in your deductible business expenses.

What qualifies as a deductible meal

For a meal to be deductible at all (before the 50% cap), it must meet all of these tests:

1. Business purpose: the primary reason for the meal is to conduct business (a client meeting, a sales call, discussing a work project)
2. Reasonable amount: CRA expects the cost to be reasonable relative to the business conducted. A $500/person dinner for a $2,000 contract is questionable.
3. No reimbursement: if your employer or a client reimbursed you, you cannot also deduct the expense
4. Documentation: a receipt plus notes on who attended and why

Meals you cannot deduct

Exceptions where 100% is deductible

A few situations allow the full cost without the 50% limitation:

• Staff events open to all employees: up to 6 qualifying events per year (annual holiday party, summer picnic, etc.). Must be available to all employees at a location, not just select managers.
• Meals included in a conference or seminar fee: if the cost of meals is included in a conference registration fee that is primarily educational, the full cost may be deductible.
• Long-haul truck drivers: eligible for an 80% deduction on meal costs (instead of 50%) when driving over prescribed distances.
• Remote worksites: meals provided to employees at a remote work location where no reasonably accessible meal alternatives exist may be 100% deductible.

Employee-specific rules

Employees can only claim meal expenses if they meet T2200 employment-expense requirements:

• They use Form T777 and have a signed T2200
• The employment conditions require them to be away from the employer’s establishment for a period of at least 12 hours
• The meal was not reimbursed by the employer

Employees cannot deduct meals eaten at their regular work location, even if they work overtime. Employees who travel for work often claim car expenses as an employee on the same T777.

Self-employed: claiming on T2125

Self-employed individuals claim meals and entertainment on Form T2125, Part 2 (Income Statement); the T2125 guide walks through the form. Enter the total qualifying meal costs in the “Meals and entertainment” line, and CRA automatically applies the 50% limitation when calculating your business income.

Keep a meal log, either digital or paper, with:

• Date
• Restaurant/venue name
• Names of all people at the meal
• Their relationship to your business (client, supplier, referral partner)
• Business purpose discussed
• Total bill and tip

Record-keeping requirements

CRA can audit meal claims up to 6 years back. Keep:

• Original receipts (not just credit card summaries)
• Your meal log / notes on business purpose
• Any calendar entries confirming the meeting took place

Credit card statements alone are not sufficient: they do not show what was purchased or who was present.

Trade shows, conferences, and business events

The rules at trade shows and conferences are more nuanced:

GST/HST input tax credits on meals

If you are registered for GST/HST, you can claim input tax credits (ITCs) on the GST/HST paid on business meals, but only on the deductible portion. Because meals are 50% deductible, you can recover only 50% of the GST/HST you paid.

Example:

• Client dinner: $200 + $26 GST/HST = $226 total
• Business expense claimed: $100 (50% of $200)
• ITC recoverable: $13 (50% of $26)

Record both the net GST/HST amount and the ITC amount on your GST/HST return in the same proportion as the income tax deduction. Registering and claiming ITCs in general are covered in GST/HST on freelance income.

When CRA audits meal claims

Meal and entertainment expenses are one of CRA’s most common targets in small business and self-employment audits. CRA red flags include:

• Meal expenses that are unusually high relative to reported revenue
• Regular meals with the same individual (could indicate personal rather than business)
• No documentation of who attended or why
• Restaurant receipts without any business purpose noted

CRA’s Interpretation Bulletin IT-518R covers food, beverages, and entertainment expenses in detail. It is officially archived but is still referenced in CRA’s current employment expense guidance and remains a useful reference if you face an audit or have complex situations.

If a meal claim is questioned, what to do when you get a CRA audit letter explains the process.

Subscriptions

Whether a subscription is deductible in Canada depends on one core question: is it primarily for earning income from employment or business, or is it a personal expense? For employees, most subscription claims also require a signed T2200. This page goes through each category: professional dues, business software, subscriptions employees must pay for, the ended news credit and the personal subscriptions that never qualify. It is one of the everyday questions answered in our guide to Canadian tax deductions and credits.

Professional and union dues (Line 21200)

Annual dues paid to a professional organization or union are fully deductible from employment income when membership is required as a condition of employment or professional practice; a social club for accountants does not qualify, but your provincial accounting body’s mandatory annual registration fee does. Which fees count, and where they appear on your T4, are covered in the union and professional dues deduction.

Business subscriptions (self-employed, T2125)

If you are self-employed, subscriptions that are primarily for business are deductible on Form T2125 as a business expense (the T2125 guide shows where they go):

Digital news subscriptions (credit ended after 2024)

The federal digital news subscription credit applied only to the 2020 through 2024 tax years, so digital news subscriptions paid for in 2025 or later are not deductible or creditable. How the credit worked, and how to claim it for one of those years if you missed it, is on the digital news subscription tax credit page.

Employee subscriptions (T2200 required)

For employees, claiming a subscription as an employment expense requires:

1. The subscription is required by the employer as a condition of employment
2. The employer has signed a T2200 confirming this
3. The cost was not reimbursed

This is rare for most subscriptions. Possible examples:

• A researcher required to maintain access to a specialized industry database
• A writer whose employer requires access to wire services
• A licensed professional who must maintain access to a regulatory publication

Claim via Form T777 → Line 22900 of your T1.

What does NOT qualify

Gym and fitness costs, including fitness apps, are covered in whether a gym membership is tax deductible. Subscriptions to an investment research service used to manage a non-registered portfolio are a different case: they may be deductible as a carrying charge, as deducting investment fees explains.

Mixed-use subscriptions

Some subscriptions have both personal and business use (e.g., Microsoft 365 used for both personal files and client work). For these:

• Employees: generally cannot claim unless the primary use is business and they have a T2200
• Self-employed: can deduct the business-use proportion; document how you estimate the split

How to claim

AI tools and software subscriptions

As AI tools become standard in many businesses, their deductibility is treated the same as other software subscriptions:

The key test is the same as for any subscription: the primary purpose must be business, and employees must have a T2200 confirming it is required for employment.

Union and professional dues

Union dues, and the professional or regulatory fees you must pay to keep your job, come off your income on line 21200 of your return. Your employer usually reports the union dues it withheld in Box 44 of your T4, and there is no limit on the claim. This page covers what counts, where to find the amount, what it saves and how to claim it; it is one of the employment deductions listed in our guide to Canadian tax deductions and credits.

Because this is a deduction rather than a credit, what it saves you depends on your marginal tax rate; the difference between a tax deduction and a tax credit explains why.

The Deduction at a Glance

What Counts as Union Dues

Deductible Dues

*If membership required for employment.

Not Deductible

How to Find Your Union Dues

On Your T4

If You Paid Extra

How Much You Save

Tax Savings by Province (2026)

Your savings = Union dues × Marginal tax rate

Calculation Example

How to Claim

Steps

Tax Software

Most software auto-fills from T4.

Professional Dues vs Union Dues

Professional Dues (Also Deductible)

Requirement for Professional Dues

Multiple Employments

Reporting

Example

Quebec Residents

Additional Considerations

Quebec residents claim on both federal and provincial returns.

Self-Employed

Professional Association Fees

Self-employed professionals report required association fees with their other business expenses on Form T2125; the line-by-line T2125 guide shows where they go.

Educators and Teachers

What Teachers Can Claim

Teachers’ Eligible Supplies Tax Credit

This is separate from union dues deduction.

Healthcare Workers

Typical Deductible Fees

Example: Ontario RN

Common Questions

Can I Claim if I’m Not in a Union?

What If My T4 Is Wrong?

Can I Claim Past Years?

Maximizing Deductions

Other Employment Deductions

Each of these has its own rules: the tradesperson’s tools deduction, car expenses as an employee, the home office deduction for employees and the moving expenses deduction. If you live in a prescribed northern zone, the northern residents deductions come off income in the same way. Required professional fees are also covered from the subscription angle in which subscriptions you can deduct.

Total Example

Common Mistakes

Working Out Your Own Saving

The saving on any of these deductions is the amount claimed times your marginal rate, which the marginal tax rate calculator gives for your province and income. For an estimate of your overall tax bill, see the income tax calculator; ways to pay less tax in Canada collects the other deductions people often miss.

Related pages

• Tax deductions and credits: the full list
• Home office expenses for employees
• Car expenses for employees
• Tools you buy for work
• Form T2200
• The T4 slip