T2200 employer policy: The no-nonsense guide for Canadian businesses

Running a business means you wear a lot of hats. You’re the visionary, the strategist, the manager and sometimes, the person who fixes the coffee machine. You’ve risked it all to build something from the ground up, creating jobs and opportunities. Part of that journey involves navigating the less glamorous side of things, like payroll and tax compliance. It’s often seen as a necessary evil, a tangle of rules that takes you away from what you love doing. But what if some of that red tape could be reframed as an opportunity? An opportunity to support your team in a way that costs you nothing but a little know-how.

Enter the T2200 form. It sounds like another piece of bureaucratic paperwork, but it’s actually a powerful tool. In a world where work has fundamentally changed, with more people working from home or using their own resources for their jobs, the T2200 is your way of acknowledging that reality. It allows your employees to claim deductions for work-related expenses they pay out-of-pocket. For you, understanding the T2200 employer policy isn’t just about compliance; it’s about being a modern, supportive employer. When you lean on smart solutions like HR Advisory and an all-in-one HR software, you’re better equipped to support your team and streamline every admin process—including T2200 management. It’s about showing your team you’ve got their back, helping them make their hard-earned money go further. 

Want a simple way to support employees and stay CRA-compliant without overthinking it? Download the T2200 Employer Policy & Signing Checklist and get a clear, step-by-step process you can use every tax year.

What is a T2200 and why should you care?

Let’s cut to the chase. The T2200, officially called the Declaration of Conditions of Employment, is a form from the Canada Revenue Agency (CRA). Your signature on this form certifies a simple fact: that you required an employee to pay for certain work-related expenses themselves as part of their job. You’re not approving dollar amounts or auditing their receipts. You are simply confirming the conditions of their employment.

Think of it as a key. By signing a T2200, you are handing your employee the key that unlocks their ability to claim valuable tax deductions on their personal income tax return. Without your signature, that door remains firmly locked. Why does this matter to you? Because in the modern work landscape, attracting and retaining top talent isn’t just about salary. It’s about the entire employee experience. When you help your team navigate their finances and get back money they are rightfully owed, you build loyalty and trust. It demonstrates that you understand their contributions go beyond just the hours they log. It’s a simple, no-cost way to enhance your benefits offering and be the kind of employer people want to work for.

Who actually needs a signed T2200 form?

Not every employee qualifies for a T2200. The form is only needed if your employee is contractually required to pay for specific work-related expenses out of their own pocket and those expenses are not reimbursed by your business. This is not about preferences or perks—it’s about what their employment agreement or job description spells out. If your business, for example, requires someone to maintain a home office or use their personal vehicle as a clear part of their job, and that’s set out in writing, that’s when the T2200 comes into play. If you offer an office but someone chooses their kitchen table anyway, that’s not enough. Start and end with what’s documented—no guessing, no grey areas.

1. Their contract of employment required them to pay for their own work-related expenses.
2. They were not reimbursed for these expenses. If they received an allowance, it must be included in their income for them to be able to claim expenses.

This is a critical point. The requirement to pay for expenses must be part of their job—not a nice-to-have or an optional perk. If it’s in their employment contract or official job description, that’s your proof. Don’t guess or assume. Decisions here need to start and end with what’s documented. If your business mandates that someone does their job remotely or drives their own vehicle for meetings, that’s a condition. If someone just prefers to work from their kitchen table even when you offer an office, that’s not grounds for a T2200. Always go by the letter of the agreement, not quick assumptions or informal practices.

Your role vs. your employee’s role

A common point of confusion around the T2200 employer policy is who does what. Getting this right is crucial for managing expectations and, more importantly, your liability. The responsibilities are clearly divided, and your part is much simpler than you might think.

Your responsibility: Completing the T2200

Your job is to be a witness to the facts. You are only responsible for filling out the employer’s section of the form. The questions will ask you to certify things like:

• Did the employee’s contract require them to pay their own expenses?
• Did you or did you not provide an allowance or reimbursement for these expenses?
• Did you require the employee to have a dedicated workspace in their home?

You are certifying the conditions, not the costs. You are not expected to know how much your employee spent on electricity or vehicle maintenance. Your legal obligation is to answer the questions on the form truthfully based on your employment agreement and policies. That’s it.

Your employee’s responsibility: The T777 form

Once you’ve done your part and given the signed T2200 to your employee, your involvement ends. The ball is now in their court. Your employee will then use another form, the T777, Statement of Employment Expenses, to do the heavy lifting. This is where they will list all their specific costs, perform the necessary calculations (like figuring out the business-use percentage of their home or car) and determine the final amount they can deduct on their tax return. The T2200 is the permission slip; the T777 is the worksheet where they do the math.

Do you submit the T2200 to the CRA?

Here’s some good news: you don’t. Neither you nor your employee needs to submit the T2200 form with their tax return. The employee must keep the signed copy in their personal records. The CRA may ask to see it later, especially if their return is selected for review or audit. It’s their proof that you, the employer, certified their conditions of employment. For your own protection, you should also keep a digital copy of every T2200 you sign. This creates a clear record of what you certified and when.

What expenses can your employees claim?

A signed T2200 opens the door for your employees to claim a range of work-related expenses. While it’s not your job to calculate every nickel and dime, knowing the categories your signature supports helps you understand the bigger picture.

• Home office expenses: Employees required to maintain a workspace at home can claim a portion of utilities like electricity, heating and water, as well as rent if they’re tenants. Minor maintenance, repairs linked to the workspace and some internet fees may also be claimable.
• Vehicle and travel costs: If you require staff to use their own car for work (beyond the commute), they can deduct work-related portions of fuel, insurance, registration, maintenance, leasing or depreciation and parking. Work travel away from home base? Eligible expenses might include reasonable meals, hotels and transport.
• Office supplies and support: Some roles come with costs for things like paper, pens, printer ink, or the cost of an assistant. Certain accounting or legal fees tied directly to earning income could also be fair game.

Mortgage interest, property taxes or major home renovations—those don’t make the cut. Stick to the essentials outlined in the contract and job description.

While you aren’t responsible for calculating the expenses, having a general understanding of what employees can claim helps you appreciate the impact of signing a T2200. 

Work-from-home expenses

This is the most common category in today’s work environment. Salaried employees can claim a portion of costs that relate to their workspace, prorated by the size of their office relative to their home’s total square footage. This includes:

• Utilities like electricity, heat and water.
• Home internet access fees.
• Maintenance and minor repair costs.
• Rent paid for a house or apartment.

Note that mortgage interest, property taxes and capital expenses (like renovations) cannot be claimed by employees.

Vehicle and travel expenses

For employees required to use their personal vehicle for work duties (not including the daily commute to your main office), the T2200 is essential. They can claim a percentage of their vehicle’s operating costs based on the kilometres driven for work versus personal use. Eligible expenses include:

• Fuel and oil.
• Insurance and registration fees.
• Maintenance and repairs.
• Lease costs or capital cost allowance (depreciation).
• Parking fees.

Employees who travel away from the office for work may also be able to claim costs for meals, lodging and transportation.

Office supplies and other costs

Beyond the big categories, employees might also incur other costs. This could be anything from stationery, printer ink and pens to the salary of a professional assistant if required by their job. Some accounting or legal fees related to employment income can also be claimed.

The employer’s signing checklist: Your policy for compliance

Handling T2200 requests on a case-by-case basis is a recipe for inconsistency and potential trouble. The best approach is to establish a clear and fair T2200 employer policy. This protects your business, ensures all employees are treated equitably and makes the process smooth and predictable.

Step 1: Establish clear internal criteria

Don’t wait for the requests to roll in. Proactively define which roles or employment conditions at your company qualify for a T2200. Document this in a formal policy. For example, your policy might state that all remote-first employees or all travelling sales staff are eligible. This prevents you from making subjective, one-off decisions and provides a fair standard for everyone.

Step 2: Verify the employment contract

Before you sign anything, always go back to the source of truth: the employee’s contract or written job description. Does it explicitly state that they are required to pay for certain expenses? If the requirement isn’t in writing, you should be very cautious. Signing a T2200 for an employee whose contract doesn’t support it puts you at risk. If needed, consider amending employment agreements to reflect current work realities.

Step 3: Complete the employer section only

This can’t be stressed enough. Your responsibility begins and ends with the employer section of the form. Fill it out accurately and completely, sign it and date it. Do not offer to fill out the employee’s section or provide advice on how to calculate their expenses.

Step 4: Keep a copy for your records

Once signed, give the original to your employee. Then, immediately save a digital copy for your own files. Organize these by year and by employee. If the CRA ever audits that employee years down the line and questions the T2200, you will have an exact copy of what you signed and certified.

The biggest T2200 mistake you can make

While the process is straightforward, the consequences of getting it wrong can be serious. Your signature is a legal declaration, and it carries weight.

Signing a form that isn’t true

The single biggest mistake is knowingly signing a T2200 containing false information. If an employee was not actually required by their contract to pay their own expenses, do not sign the form, no matter how much they ask. It might feel like you’re helping them out, but you are actually making a false declaration to the CRA. This exposes you and your business to penalties and legal trouble. Your integrity and your business’s reputation are on the line.

Reimbursing expenses AND signing the form

An employee cannot have it both ways. They can’t be reimbursed for an expense and also claim a deduction for that same expense on their taxes. This is called “double-dipping,” and the CRA is very clear that it’s not allowed. When you fill out the T2200, you must accurately report whether you provided any allowance or reimbursement. If you reimbursed them for their full internet bill, for example, they cannot then claim that internet bill as a home office expense. Honesty here is non-negotiable and is a core part of a responsible T2200 employer policy.

Your T2200 employer policy: From compliance to connection

Navigating the world of tax forms doesn’t have to feel like a chore. The T2200 process, when you break it down, is simple. It’s about certifying the conditions of employment you’ve already agreed to. By creating a formal T2200 employer policy, you’re not just ticking a compliance box. You are building a framework of fairness and transparency for your team. You’re showing them that you see the whole picture — that their commitment sometimes extends beyond the office walls and into their own homes and vehicles. This isn’t just paperwork; it’s a powerful, no-cost way to strengthen trust and prove you’re the kind of forward-thinking employer people are proud to work for. You’re in control, and getting this right is another way you lead your business and your people to success.

Ready to put policy into practice? Download the free checklist now and build your T2200 process with confidence