Tradesperson’s Tools Deduction

Many employed trades people must provide their own tools as a condition of employment. In recognition of this, an employed tradesperson is entitled to deduct the cost of eligible new tools acquired in a taxation year with a cost in excess of $1,146, including GST/HST. The maximum deduction for eligible tools is $500 for the year.

An eligible tool is a tool that is acquired by the taxpayer for use in connection with the taxpayer’s employment as a tradesperson that has not been used for any purpose before it is acquired by the taxpayer. Electronic communication devices and electronic data processing equipment will not qualify as eligible tools (unless the device or equipment can be used only for the purpose of measuring, locating or calculating).

Your employer must certify the conditions of your employment on Form T2200 Declaration of Conditions of Employment to verify your eligibility to claim the cost of tools. The Canada Revenue Agency does not require you to file the form with your tax return; however, you must retain it in case they wish to see it.

The tradesperson will also be eligible for a rebate of the goods and services tax/harmonized sales tax paid on the portion of the purchase price of the new tools that is deducted in computing employment income.

Consult a Chartered Professional Accountant for more information.