Regarding the deductibility of the cost of an extended warranty on an automobile paid by an employee, CRA stated:
[T]he conditions of paragraph 8(1)(f) or paragraph 8(1)(h.1) … must be satisfied for the employee to be entitled to a deduction. Since an employee computes income on a cash basis and subsection 18(9) does not apply to an employee, we are of the view that the extended warranty fee paid by an employee (which would otherwise be deductible pursuant to paragraph 8(1)(f) or paragraph 8(1)(h.1), as the case may be) will be fully deductible in the year of payment.