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Budget 2026 proposes to let commission employees claim travel and vehicle costs under the general rules and also claim other expenses up to their commission income, from 2027. It is a proposal, not law. For 2026 the current CRA rules apply, and you still need a T2200.
What does Budget 2026 propose for commission employees?
Budget 2026, tabled on November 5, 2026, proposes to remove a rule that makes commission employees choose between two ways of claiming expenses. Today, someone who claims the commission-specific deduction cannot also deduct travel and motor vehicle expenses under the general employee rules. The proposal would lift that limit, so both could be used together. It would apply to the 2027 and later tax years.
This is a proposal, not law. We read the Department of Finance tax measures document in November 2026 and found no bill that has passed. The budget gives no worked example, and the exact wording will come only with draft legislation.
Who counts as a commission employee?
The CRA sets out conditions on its commission employees page. All five have to be met:
- Your contract required you to pay your own expenses, and your employer did not reimburse them.
- You normally worked away from your employer's place of business.
- You were paid in whole or in part by commissions based on sales volume or contracts negotiated.
- You did not receive a non-taxable travel allowance.
- You kept a copy of Form T2200, completed by your employer.
Typical examples are a real estate salesperson paid on commission through a brokerage that treats them as an employee, or an outside sales representative on commission plus a base wage. Whether you are an employee or self-employed matters here, and our article on the T2200 form explains how the employer's declaration works. Someone who is really self-employed uses different rules, covered in our self-employed deductions guide.
How do commission employees deduct employment expenses today?
A commission salesperson who meets the conditions can deduct employment expenses incurred to earn commission income, up to the commissions earned in the year, with one carve-out: vehicle interest and capital cost allowance are not subject to that cap, according to the CRA. If you claim under this commission provision, you cannot also use the general travel and motor vehicle deductions. The CRA says that if your expenses exceed the commission limit, you may instead claim as a salaried employee, which covers travelling, motor vehicle expenses and certain others without the commission cap, as long as you meet those conditions.
So today the claim is one route or the other. You work out both and take the better one. The CRA's own example has $5,000 of commissions and $9,000 of expenses, including $1,500 of capital cost allowance and $500 of interest. The commission method gives $7,000, while the salaried method would give $8,000 because travelling expenses are not capped by commissions.
Some expenses have their own limits. Food, beverages and entertainment are generally limited to 50%, and commuting between home and a regular workplace does not count. Parking at your employer's office is not claimable either, according to the CRA page.
The claim goes on line 22900 with totals from Form T777, and your employer completes Form T2200.
What could the change mean in dollars?
An illustration with made-up figures and our own reading of the proposal. It ignores the CCA and interest carve-out, the 50% limit on meals and any other detailed rules, so it shows the shape of the effect and not a real result.
A commission employee earned $30,000 in commissions. Travel and vehicle costs were $26,000, and other employment expenses such as advertising, supplies and a home office were $10,000. Total expenses are $36,000.
| Rule | How it is worked out | Deduction |
|---|---|---|
| Today, commission route | Total $36,000 capped at commissions of $30,000 | $30,000 |
| Today, salaried route | Travel and vehicle only in this illustration, with no commission cap | $26,000 |
| Proposed, 2027 and later | Travel and vehicle $26,000 under the general rules, plus other expenses $10,000 under the commission rules (cap $30,000) | $36,000 |
Today the better route gives $30,000. Under our reading of the proposal the deduction would be $36,000, which is $6,000 more. The gain appears for someone whose travel and vehicle costs are large and whose other expenses would be lost under a single route. If your expenses are below your commissions, the cap does not bite and you may see no change.
What records do I need either way?
The CRA asks you to keep records for at least six years: a daily expense record, receipts, ticket stubs, invoices and credit card statements, and a vehicle log with total kilometres and kilometres driven for employment. For a vehicle or instrument you bought or sold, keep the dates, costs and proceeds. A receipt should show the date, the seller, your name and address, a description and the GST/HST information.
The proposal does not change those habits. A proper vehicle log is the first thing a reviewer asks for, so start one on January 1. Our mileage rates page and the guide to home office expenses cover two of the most common items in a commission claim.
What is still unknown?
Several points are open. The budget text does not give an example, and we do not know how the draft law will treat the carve-outs for capital cost allowance and vehicle interest, or whether the commission cap will apply to all the other expenses together. It also does not say whether the T2200 requirement stays the same, and the budget sections we read do not mention it.
The start year is the better-known part: 2027 and later years. A commission employee who files for 2026 follows the current rules. If you are thinking about the change, wait for the bill text before changing how you keep records or answer your employer's T2200.
What should I do now?
- Ask your employer for a T2200 for 2026, since the current rules need it.
- Keep a clean split in your records between travel and vehicle costs and other expenses, so either set of rules can be applied later.
- Run both routes on your 2026 return and take the larger one.
- Read our overview of Budget 2026 and your taxes and the page on the sales commission calculator to see how commission pay is taxed.
Where does this information come from?
The proposal and its 2027 start come from the Department of Finance Budget 2026 tax measures supplementary information, section on the deductibility of expenses against commission income, checked on November 12, 2026. Current rules, conditions and the CRA example come from the CRA page on commission employees and line 22900, checked in November 2026. The illustration is our own and uses invented figures. This is an independent information site: we provide no services, we do not represent the CRA or any organization, we collect information from open sources, and we do not guarantee that anything here is accurate or current. We accept no liability for decisions based on it.
Frequently asked questions
What is the proposed change for commission employees?
Budget 2026 proposes to remove the rule that stops commission employees from deducting travel and motor vehicle expenses under the general rules while also claiming commission-based expenses. They could then claim both, with the commission-based claims limited to commission income. It would apply from 2027.
Is the change in effect for my 2026 return?
No. The proposal applies to 2027 and later tax years, and it is not law yet. For your 2026 return, follow the CRA rules in force: the commission method, capped at commissions, or the salaried method, and pick whichever gives the larger deduction.
Who qualifies as a commission employee under CRA rules?
You must have paid your own expenses under your contract, worked mainly away from your employer, been paid at least partly by commissions on sales or contracts, received no non-taxable travel allowance, and kept a T2200 signed by your employer. Meeting all five is required.
Do I still need a T2200?
Under today's rules, yes. The CRA says you keep a copy of Form T2200 completed by your employer. The budget sections we read do not say whether that changes. Keep asking your employer for one each year until the legislation clearly says otherwise, since a missing form can sink the whole claim.
Where do I claim these expenses on my return?
The CRA says to enter eligible totals from Form T777 on line 22900. The form lists vehicle, travel, supplies and other categories. Home office costs follow separate CRA guidance. Keep the T2200, receipts and a vehicle log for at least six years in case of a review.
Could the change reduce my deduction?
The proposal removes a restriction, so on its face it widens what you can claim, not narrows it. The detailed legislation is not out, and details such as caps and carve-outs could matter. Wait for the bill before changing how you plan your claim.