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Taxpayer wins
The Court found a sufficient link between the advertising from the sponsorship and the taxpayer’s investment advisory services from which he generated his commission income. In addition, the Court opined that the taxpayer’s sponsorship expenses constituted a much lower portion of his total income (e.g. 5% for 2015) than in other cases. For example, in a 2010 case, the Court found that employment expenses constituting 65% of the taxpayer’s income were reasonable. The deduction was allowed.
Editors’ comment
The scope of deductible commission employment expenses is much broader than for non-commission employment expenses. Expenses incurred to earn commission income are deductible provided that they are not specifically prohibited (for example, personal expenses or payments that reduced a taxable employment benefit) and provided that the other standard conditions for deduction are met. In contrast, only expenses specifically listed as deductible in the Income Tax Act can be deducted against non-commission employment income.
Action: The rules surrounding deducting expenses against employment earnings are complicated. Care should be afforded before incurring expenses intended to be deducted against employment income.
*The preceding information is for educational purposes only. As it is impossible to include all situations, circumstances and exceptions, a further review should be done by a qualified professional. No individual or organization involved in either the preparation or distribution of this text accepts any contractual, tortious, or any other form of liability for its contents.
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