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Personal Tax
Filing Your Return
-> Employment expenses -> Employee Tools -> Employed tradesperson tools deduction

Tools Deduction for Employed Tradespersons

Income Tax Act s. 8(1)(s)

Eligible tools which were purchased in order to earn employment income as a tradesperson (hairdresser, cook, plumber, electrician, mechanic, apprentice tradesperson, etc.) may be deducted as employment expenses on line 229 of the federal tax return. Employment expenses are first entered on Canada Revenue Agency (CRA) Form T777 Statement of Employment Expenses.

For 2012, the "base amount" used in the calculation of the tool deduction is $1,095 ($1,117 for 2012). No deduction is available unless the cost of tools exceeds this amount. The maximum deduction is $500. The base amount is indexed for inflation each year, in the same manner as tax brackets and non-refundable personal tax credits.

The Québec calculation for the tool deduction for salaried tradespersons differs from the one described below. However, Québec has a fillable form, TP-75.2-V, which you can complete, and it will calculate the appropriate deduction amount. The maximum deduction for Québec residents is also $500, and no deduction is available unless the total cost of tools exceeds $1,055 for 2011 ($1,085 for 2012).

What is an eligible tool?

An eligible tool of a taxpayer is a tool, including related equipment, such as a toolbox, that:

	is acquired by the taxpayer on or after May 2, 2006 for the use of the taxpayer in employment as a tradesperson;
	has not been used for any purpose before it is acquired by the taxpayer;
	is certified, using form T2200 Declaration of Conditions of Employment, by the taxpayer's employer to be required to be provided by the taxpayer as a condition of, and for use in, the taxpayer's employment as a tradesperson; and
	is, unless it can be used only for the purpose of measuring, locating or calculating, not an electronic communication device or electronic data processing equipment.

How is the deduction calculated?

Our Employee Tools Deduction Calculator will do the federal tools deduction calculation for you.

The deduction is the maximum of $500 and X, where X = A - $1,095 (for 2012), and

A = the lesser of:

the total cost of eligible tools purchased in the year; and

the total of:

your income from employment as a tradesperson in the year

plus the amount you received in the year under the Apprenticeship Incentive Grant and the Apprenticeship Completion Grant programs;

less the amount of any Apprenticeship Incentive Grant and Apprenticeship Completion Grant overpayments repaid in the year

Example:

	Tool purchases in 2012 = $3,000
	Employment income as a tradesperson = $35,000
	Apprenticeship Completion Grant received = $1,500
	Apprenticeship Incentive Grant overpayment repaid = $550

X = A - $1,095

A = the lesser of

total cost of eligible tools of $3,000, and

$35,000 + $1,500 - $550 = $35,950

Therefore, X = $3,000 - $1,095 = $1,905, and
the allowable deduction is the lesser of $500 and $1,905, which is $500.

The tool costs will include any GST/HST or provincial sales taxes incurred. You may be eligible for a refund of the GST/HST included in the costs. See Employee and Partner GST/HST rebate on the GST/HST page.

When the tools deduction is claimed, keep the information that will allow you to calculate the adjusted cost of each tool. The adjusted cost is the original cost reduced by any tool deductions claimed. If you subsequently sell a tool, it is necessary to include any gain from the sale in income.

CRA resources:

	Line 229 Other Employment Expenses
	T4044 Employment Expenses - See Employed Tradespersons
	Form T777 Statement of Employment Expenses

Revised: January 27, 2013

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Personal Tax Filing Your Return -> Employment expenses -> Employee Tools -> Employed tradesperson tools deduction

Tools Deduction for Employed Tradespersons

Income Tax Act s. 8(1)(s)

What is an eligible tool?

How is the deduction calculated?

Personal Tax
Filing Your Return
-> Employment expenses -> Employee Tools -> Employed tradesperson tools deduction