The Conservative government is introducing the Canada employment credit to recognize work-related expenses.

The 2006 federal budget speech sets out “home computers, uniforms and supplies” as eligible work-related expenses. However, it is not necessary to make any specific claims. The tax credit is automatically available.

“This new tax credit will help alleviate the significant inequity that exists between the self-employed and employees and their abilities to write off expenses,” says Jamie Golombek, vice president of taxation and estate planning for AIM Funds Management Ltd. in Toronto.

The new credit will take effect July 1, 2006, and will provide tax relief on the lesser of $500 and the individual’s employment income for the year. Because this measure will take effect mid-year, the maximum amount on which the credit is calculated will be $250 for the 2006 taxation year. For the 2007 and subsequent taxation years, the maximum amount on which the credit is calculated will be increased to $1,000.

This isn’t the first time this credit has existed, says Golombek: “Prior to the 1987 tax reform, employees were entitled to claim a $500 basic employment deduction, which was meant to compensate them for their non-deductible employment expenses.”