How to report your commission income and claim your expenses on your tax return?

As a salesperson, you can either be classified as an employee earning commission income or as a self-employed commission salesperson. How to report your commission income and claim your expenses on your tax return depends on which category you are in.

Employees earning commission income

If you are an employee earning commission income, you will receive a T4 slip from your employer. The commission income is shown in box 42 (the amount in box 42 is included in box 14). It has to be reported on line 102. This amount is already included in your income on line 101, so do not add it again when you calculate your total income on line 150.

You may claim deductions against your employment income for expenses such as traveling, entertainment, salary to assistants, supplies, telephone calls, automobile, and home office. To deduct the expenses, your employer must complete Form T2200, Declaration of Conditions of Employment. The deductions are claimed on Form T777, Statement of Employment Expenses. The allowable expenses will be shown on line 229 to calculate net income line 236.

Self-employed commission salesperson

If you are a self-employed commission salesperson, you will receive a T4A slip. Report the income on Form T2125, Statement of Business or Professional Activities.

On Form T2125, you can also claim any reasonable expenses that you incurred to earn the commission income such as adverting, meals and entertainment, rent, supplies, salaries to assistance, telephone, travel, automobile, home office, and etc.

The gross commission will be shown on line 166. After deducting the expenses, the net income is reported on line 139 and added to your total income line 150.

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