Illustrative example based on the kinds of matters we handle — not a specific client engagement; outcomes depend on the facts.
The situation
A salaried employee — picture a regional sales representative who spent much of the year travelling to client sites and working from a home office — claimed employment expenses on their return. The deductions were ordinary for that role: vehicle costs, supplies, and a portion of home-office expenses, all supported by a signed Form T2200, Declaration of Conditions of Employment.
Months later a CRA reassessment arrived. The auditor had disallowed almost all of the claimed expenses, added the amounts back to income, and issued a balance owing with interest. The notice gave little explanation beyond a statement that the expenses were not adequately substantiated and that the conditions for deductibility under the Income Tax Act had not been met. To someone who had filed in good faith, it felt arbitrary and out of proportion.
The challenge
Denied employment-expense files are deceptively difficult. The legal threshold is strict: an employee can generally deduct travel and supply costs only when they were required by the contract of employment to pay them, were not reimbursed, and are properly documented — and the home-office rules add their own conditions. The taxpayer carries the burden of proof.
- Records were partial. Like many employees, the person had a mileage pattern but not a contemporaneous log for every trip, and some receipts had faded or gone missing.
- The T2200 was thin. The employer had signed the form but answered some questions tersely, leaving room for the CRA to argue the conditions of employment were not what the deductions assumed.
- An objection had already stalled. The reassessment had gone through the Notice of Objection stage and been largely confirmed, so the realistic next step was the Tax Court of Canada.
The amount in dispute was modest in litigation terms — the kind of figure where a full General Procedure trial would cost more than the tax at stake. That pointed toward the Informal Procedure, the Tax Court's streamlined track for smaller appeals, where the rules of evidence are relaxed and counsel can act without the cost and formality of a full trial.
How we approached it
The first conversation was about reassurance and a plan, not panic. We explained, in plain terms, what the CRA had to assume and what we would have to show, and we set out the route in writing before any retainer.
- We confirmed the file belonged in the Informal Procedure and filed a Notice of Appeal within the deadline, framing the dispute narrowly around the categories the CRA had disallowed.
- We rebuilt the evidentiary record. That meant reconstructing mileage from calendars, client meeting records, and map data; gathering replacement statements for missing receipts; and obtaining a clearer, more complete account of the employment conditions to support the existing T2200.
- We prepared the witness. In the Informal Procedure the taxpayer's own credible, well-organized testimony often carries real weight. We worked through how to explain the role and the expenses simply and consistently — the kind of preparation we describe in our guide to evidence and the burden of proof in Tax Court.
- We engaged Justice counsel early. Many of these appeals narrow or resolve before a hearing once the Crown sees an organized record, so we pressed to settle the clearly supportable categories and reserve the hearing for the genuinely contested ones.
For readers who want the mechanics, our overview of the Tax Court Informal Procedure and our note on what makes a tax court appeal succeed walk through the same steps in general terms.
The outcome
In a matter like this, the realistic result is not a dramatic reversal but a steady rebuilding of the case until the numbers hold up. Once the reconstructed records and a fuller picture of the employment conditions were before the Crown, much of the dispute fell away by agreement, and a focused hearing dealt with the rest.
The kind of outcome that can follow — never assured — is that a substantial portion of the disallowed expenses is restored, the reassessment is reduced accordingly, and the associated interest shrinks with it. Some categories may stand; others come back in full. What changed most was the move from an unexplained, intimidating balance owing to a result the taxpayer could understand and live with.
The takeaway
A denied employment-expense reassessment is not the last word. The Informal Procedure exists precisely so that an ordinary salaried taxpayer can challenge the CRA without a ruinous litigation budget — but success usually turns on documentation and preparation, not indignation. A few practical points generalize from files like this:
- Keep a contemporaneous mileage log and retain receipts; reconstruction is possible but harder.
- Make sure your T2200 actually reflects your real conditions of employment.
- Don't treat a confirmed objection as the end — there is still the Tax Court.
If you are facing a denied-expense reassessment, an active CRA audit, or are weighing whether to appeal after an objection, the path depends entirely on your facts. Results vary from case to case, and nothing here is a prediction of any particular outcome.
Illustrative example based on the kinds of matters we handle — not a specific client engagement; outcomes depend on the facts. This is general information, not legal advice.