2020-0867061I7 Employment expenses -

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Principal Issues: Whether the cost of items such as masks, gloves and sanitizing liquid are deductible by the employee under subparagraph 8(1)(i)(iii), where the employer requires the employee to use them in the course of carrying out their employment duties and the employer does not reimburse the employees for the items.

Position: See below.

Reasons: See below.

Author: Zabolotney, Brad
Section: subpara. 8(1)(i)(iii); s. 122.9; s. 67

                                                                                 April 13, 2021

Assessment, Benefit and Service Branch                HEADQUARTERS
Call Centre Services Directorate                              Income Tax Rulings
Knowledge Management Division                            Directorate
                                                                                  B. Zabolotney
                                                                                  403 829-0870


Attention: Jeff Haynes, Senior Program Officer        2020-086706

Re: Employment expenses –masks, gloves, and sanitizing liquid

We are writing in reply to your correspondence of October 19, 2020.  In the context of the current COVID-19 pandemic, you have asked whether the cost of masks, gloves, sanitizing liquid and other similar items purchased and used by an employee, would be deductible under the Income Tax Act (the “Act”).  In your view, where the items are necessary for the employee to carry out their employment duties and where the employee is required by their employer to pay for such items, the cost of the items should be deductible from employment income under subparagraph 8(1)(i)(iii) of Act.

Our comments

Subsection 8(2) of the Act provides that no deductions are allowed in computing an individual’s income from employment except as specifically authorized under section 8. Generally, in computing employment income for the year, an employee may deduct the cost of supplies under subparagraph 8(1)(i)(iii) of the Act if the requirements in that subparagraph and in subsection 8(10) of the Act are satisfied.

The cost of supplies are generally deductible under subparagraph 8(1)(i)(iii) of the Act provided the following requirements are met:

(a)   the employee is required by the contract of employment to pay for such supplies;

(b)   the supplies are consumed directly in the performance of the employment duties (that is, the supplies must be used up in the year and play an integral and essential part in the performance of the employment duties); and

(c)   the employee has not been reimbursed and is not entitled to be reimbursed for such supplies.

Ordinarily, an express requirement within the terms of a written contract of employment would be necessary to show that an employee is required by the contract of employment to pay for the cost of supplies. However, it is the Canada Revenue Agency’s (CRA) general position that this requirement may also be considered to have been satisfied where it was tacitly understood by the employee and the employer that such payment was to be made by the employee to carry out the duties of the employment.

Where the requirements of subparagraph 8(1)(i)(iii) of the Act are met, subsection 8(10) of the Act further requires that the employee have a completed and signed Form T2200, Declaration of Conditions of Employment, from their employer.  The CRA does not require the employee to file this form with their personal income tax return, but the employee must keep it in case the CRA asks to see it at a later date.

In the context of the current COVID-19 pandemic, where an employer requires an employee to pay for and use disposable masks, disposable gloves, sanitizing liquid and other similar items while carrying out their employment duties, we are of the view that the cost of these items would be deductible under subparagraph 8(1)(i)(iii) of the Act if:

*     the cost of the items used in the year are reasonable (section 67 of the Act),

*     the employee did not receive a reimbursement or is not entitled to receive a reimbursement from their employer; and

*     the employee has a completed and signed Form T2200 from their employer.

Unless exempted, a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Canada Revenue Agency’s electronic library. After a 90-day waiting period, a severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. You may request an extension of this 90-day period. The severing process removes all content that is not subject to disclosure.

We trust these comments will be of assistance to you.

Yours truly,

Nerill Thomas-Wilkinson, CPA, CA
Business and Employment Income Section
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch

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