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Employed Tradesperson's Tools

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Personal Tax
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     -> 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.

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For 2013, the "base amount" used in the calculation of the tool deduction is $1,117 ($1,127 for 2014).  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 $1,110 for 2013 ($1,120 for 2014).

What is an eligible tool?

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

bulletis acquired by the taxpayer on or after May 2, 2006 for the use of the taxpayer in employment as a tradesperson;
bullethas not been used for any purpose before it is acquired by the taxpayer;
bulletis 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
bulletis, 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 - $1,117 (for 2013), and

A = the lesser of:
bullet the total cost of eligible tools purchased in the year; and
bullet the total of:
bullet your income from employment as a tradesperson in the year
bullet plus the amount you received in the year under the Apprenticeship Incentive Grant and the Apprenticeship Completion Grant programs;
bullet less the amount of any Apprenticeship Incentive Grant and Apprenticeship Completion Grant overpayments repaid in the year

Example:

bullet Tool purchases in 2013 = $3,000
bullet Employment income as a tradesperson = $35,000
bullet Apprenticeship Completion Grant received = $1,500
bullet Apprenticeship Incentive Grant overpayment repaid = $550

X = A - $1,117

A = the lesser of 
bullet total cost of eligible tools of $3,000, and
bullet $35,000 + $1,500 - $550 = $35,950

Therefore, X = $3,000 - $1,117 = $1,883, and
the allowable deduction is the lesser of $500 and $1,883, 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:

bullet Line 229 Other Employment Expenses
bulletT4044 Employment Expenses - See Employed Tradespersons
bullet Form T777 Statement of Employment Expenses
 

Revised: March 30, 2014

 

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