Schofield – Tax Court of Canada finds that headhunter fees expended to increase commission employment income were deductible even though not specified in the employment contract

A broker employed on commission by BMO Nesbit Burns incurred fees to a headhunter firm to identify an associate who could work for her in canvassing clients and sharing her duties. CRA allowed most of her other expenses claimed under s. 8(1)(f) such as for travel, but not the headhunter fees. Although none of these expenses were specifically required to be incurred by her in her employment contract, her employer certified in form T2200 that, “yes,” she was required to pay her own expense in carrying out her duties. The Crown argued that “nowhere was it written that the appellant was required to incur the recruitment expenses.”

In allowing the headhunter fees, St-Hilaire J stated:

[A]ccording to my interpretation of subparagraph 8(1)(f)(i), where the employer confirms that the employee is required to pay her expenses, and the employee demonstrates that she incurred her expenses to earn her employment income, the condition is satisfied.

Neal Armstrong. Summary of Schofield v. The King, 2022 CCI 142 under s. 8(1)(f).