Updated for Tax Year 2016
Did you buy tools to earn employment income as a tradesperson or an eligible apprentice mechanic?
If so, you don’t want to miss out on the Tradesperson’s Tools Deduction; it provides an income tax deduction of up to $500 of the cost of eligible tools bought to earn income.
What Kind of Tools Can I Claim?
For the purposes of the Tradesperson’s Tools Deduction, an eligible tool is a tool that:
- you bought to use in your job as a tradesperson and was not used for any purpose before you bought it;
- your employer certified as being necessary for you to provide as a condition of, and for use in, your job as a tradesperson; and
- is not an “electronic communication device” (like a cell phone) or “electronic data processing equipment” (unless the device or equipment can be used only for the purpose of measuring, locating, or calculating).
To claim the Tradesperson’s Tools Deduction for eligible tools, you’ll need your employer to complete and sign CRA form T2200 – Declaration of Conditions of Employment. Your employer’s completion of this form certifies that the tools you bought were necessary for your employment.
To complete Form T2200, you’ll need to give your employer a list of the tools you want to claim. You don’t need to include this list with your income tax return but you should keep it, and the receipts for your tools, for your records, in case the CRA asks to see them later.
How Much Will My Deduction Be?
Depending on the cost of your tools, you can receive a deduction of up to $500.
The maximum amount for eligible tools is the lesser of:
- $500; and
- the amount, if any, determined by the formula: A minus $1, 161,
where A equals the lesser of:
- the total cost of eligible tools you bought in the year (including taxes)
- your income from employment as a tradesperson for the year,
plus the amount you received in the year under the Apprenticeship Incentive Grant and the Apprenticeship Completion Grant programs, if applicable;
minus the amount of any Apprenticeship Incentive Grant and Apprenticeship Completion Grant overpayments that you had to repay in the year, if applicable.
Employed apprentice mechanics may also be able to qualify for an additional deduction; see the CRA’s page Deduction for Tools for an Eligible Apprentice Mechanic.