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Deductions for Tradespersons' & Apprentice Mechanics' Tools

Subject: Deductions Number: 10-01 Date: 1/8/2010

Two deductions may be available to individuals

Two deductions may be available to individuals employed as tradespersons and/or apprentice mechanics in respect of eligible tools acquired and used in employment.

Tradespersons’ Tools Deduction:

A tradesperson may deduct an amount in respect of “eligible tools” acquired for use in his or her employment, as required by his or her employer. The Canada Revenue Agency views a tradesperson to be a person engaged in an occupation that demands a certain level of skill, whether or not the person is a registered tradesperson.

The amount deductible is the lesser of:

i) $500, and

ii) the cost of eligible tools acquired in the year minus $1,000.

Accordingly, a tradesperson must acquire at least $1,000 of eligible tools in the year but the maximum deduction is $500 even if eligible tools in excess of $1,500 are acquired.

An eligible tool is one that:

a) is acquired for use in the tradesperson’s employment,

b) has not been used for any purpose before being acquired,

c) is certified by the tradesperson’s employer (on Form T2200) to be required as a condition of the tradesperson’s employment, and

d) is not an electronic communication device, or electronic data processing equipment (certain exceptions apply).

Apprentice Mechanics’ Tool Costs:

In addition to the tradespersons’ tools deduction, an apprentice mechanic may also deduct an amount in respect of eligible tools acquired for use in employment as an apprentice mechanic. To qualify, an individual must be employed as an apprentice mechanic and be registered in a Red Seal program (see www.red-seal.ca) leading to designation as a mechanic.

Generally, the deduction is available to the extent that the cost of eligible tools acquired exceeds $1,500 in a year. The amount deductible is the cost of eligible tools acquired minus 5% of the individual’s income from employment as an apprentice mechanic (including grants).

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