Can we Claim Bond paid out on Tax Return?

[ave8er]

Anyone has any input if we can claim Tax on Bond paid out? Like towards Training expense or something similar? Any suggestions would be of great help.

[Invertago]

You'll need a T2200 Declaration of Conditions of Employment found at the CRA website. If the company won't provide that it is because they are double dipping, aka expensing your training as their tax write off while billing you at the same time.

[co-joe]

You'll need a T2200 Declaration of Conditions of Employment found at the CRA website. If the company won't provide that it is because they are double dipping, aka expensing your training as their tax write off while billing you at the same time.

And then they'd have to admit that they made money off of you when you paid out your bond and pay tax on it as income.

[Invertago]

Personally I wouldn’t pay a bond if a company couldn’t provide the proper documentation necessary for me to write it off on my taxes. Let them sue, they’ll just expose themselves.

[digits_]

You'll need a T2200 Declaration of Conditions of Employment found at the CRA website. If the company won't provide that it is because they are double dipping, aka expensing your training as their tax write off while billing you at the same time.

How is that double dipping? They pay for the training so of course they will put it as a cost in their books. And then you pay them back, which is income. Why would they not want to give you a T2200?

I am not so convinced that form is absolutely necessary. Even if they refuse, you likely have a training contract that stipulated the necessity of the bond. If you ever get audited, chances are that would provide a strong case to the auditor that your bond was indeed an employee expense.

[Invertago]

As for the form being an absolute necessity, that is more a matter of opinion between different CRA agents, so, in my experience its best to have the paperwork and not need it then need it and not have it. If the company is doing everything above board, there should be no problem and no cost to providing the proper forms. If they can't provide the proper paperwork they probably hiding something in the accounting department. Seems a simple case of, if they want the bond, they can provide the proper paperwork or too bad for them. I'd rather fight the company over providing the paperwork than fight the CRA because I'm missing the necessary paperwork.

[digits_]

As for the form being an absolute necessity, that is more a matter of opinion between different CRA agents, so, in my experience its best to have the paperwork and not need it then need it and not have it. If the company is doing everything above board, there should be no problem and no cost to providing the proper forms. If they can't provide the proper paperwork they probably hiding something in the accounting department. Seems a simple case of, if they want the bond, they can provide the proper paperwork or too bad for them. I'd rather fight the company over providing the paperwork than fight the CRA because I'm missing the necessary paperwork.

Sure, better to have the paperwork, I don't disagree on that point.

How would you suggest a company keeps a bond under the table when they literally make you sign a contract though? You seem to be hinting at something but I just don't get bow this scam is supposed to work, and who would benefit.

[Invertago]

Its not a scam agains the employee (other then the ethical arguments against bonds). It allows the company to record the training as an expense against revenue on their income taxes then collect the bond from the pilot into a misc account with no paperwork attached to it. The bond 'contract' is often just a piece of paper written up by an assistant chief pilot with some minor help from a google template isn't worth much and not something the CRA will look for. On the other hand if the pilot has the appropriate government forms filled out be the company the CRA will easily be able to match them to the companies corporate tax documents. Govt workers love to see paperwork on forms they recognize it makes papertrails easier to follow. If the pilot is audited, then the CRA will want proof of the expense, they'll see the gov't forms which will then make it easy to match to the corporate expenses/income reported on the companies records. I'm not an accountant myself, but I've hired them to sort though my own business taxes before and am just trying regurgitate what they've told me in the past. I've also learned from a few unpleasant experiences with the CRA in the past.

[Bede]

Taxation is always a 2 way street. If you want to write the bond principle off, the repayment monies that the company provide you becomes taxable.

[photofly]

Taxation is always a 2 way street. If you want to write the bond principle off, the repayment monies that the company provide you becomes taxable.

Am I misunderstanding? A bond is an agreement to pay a diminishing sum if you leave before the term expires.

If you do leave employment before the expiry of the bond and have to make a lump sum payment, is that deductible from your income for tax purposes as an employment expense?

I don’t see the opportunity for a scam. Training costs are a legitimate expense; bond repayments reduce that expense, regardless of what you call them.

[Bede]

Taxation is always a 2 way street. If you want to write the bond principle off, the repayment monies that the company provide you becomes taxable.

Am I misunderstanding? A bond is an agreement to pay a diminishing sum if you leave before the term expires.

If you do leave employment before the expiry of the bond and have to make a lump sum payment, is that deductible from your income for tax purposes as an employment expense?

I don’t see the opportunity for a scam. Training costs are a legitimate expense; bond repayments reduce that expense, regardless of what you call them.

I guess it comes down to semantics. Technically a bond would be you pay $x at the outset and the company pays you back a pro rata amount over, let's say, 2 years.

A promissory note is when you agree to pay the company $x if you leave before the expiration.

I've seen both bonds and promissory notes applied in aviation.

You can always try to claim it on the taxes and fight it at the TCC. I just don't know if you'd win.

[digits_]

Taxation is always a 2 way street. If you want to write the bond principle off, the repayment monies that the company provide you becomes taxable.

Am I misunderstanding? A bond is an agreement to pay a diminishing sum if you leave before the term expires.

If you do leave employment before the expiry of the bond and have to make a lump sum payment, is that deductible from your income for tax purposes as an employment expense?

I don’t see the opportunity for a scam. Training costs are a legitimate expense; bond repayments reduce that expense, regardless of what you call them.

I guess it comes down to semantics. Technically a bond would be you pay $x at the outset and the company pays you back a pro rata amount over, let's say, 2 years.

A promissory note is when you agree to pay the company $x if you leave before the expiration.

I've seen both bonds and promissory notes applied in aviation.

You can always try to claim it on the taxes and fight it at the TCC. I just don't know if you'd win.

Very often (always?) you have to sign a paper authorizing the company to withhold outstanding bond payments from your final salary. Which means you don't even get the money, and it's deducted by the company from your salary. Would that not be a strong indication you can deduct it from you income as well?

[Bede]

Similar expenses aren’t listed in any CRA guidance documents. https://www.canada.ca/en/revenue-agency ... enses.html

You can always try and see what happens.

[CaptDukeNukem]

Airlines are still doing bonds? Wow

[Invertago]

Airlines are still doing bonds? Wow

The bad ones do…