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Tools Deduction for Employed Tradespersons

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

Eligible tools which were purchased in the taxation year in order to earn employment income as a tradesperson (e.g. hairdresser, cook, plumber, electrician, mechanic, apprentice tradesperson, etc.) may be deducted as employment expenses on line 22900 (line 229 prior to 2019) of the federal tax return. Employment expenses are first entered on Canada Revenue Agency (CRA) Form T777 Statement of Employment Expenses.

What is a tradesperson? Technical Interpretation 2006-0216591I7 indicates that "any person engaged in an occupation that demands a certain level of skill may be considered a tradesperson for purposes of the deduction, whether the person is registered or not".

The "base amount" used in the calculation of the tool deduction is the federal Canada Employment Amount, which can be found in our Tables of Non-Refundable Tax Credits, and is indexed annually for inflation.

For 2023, the "base amount" used in the calculation of the tool deduction is $1,368 ($1,433 for 2024). No deduction is available unless the cost of tools exceeds this amount. The maximum deduction is $1,000 ($500 for 2022 and earlier years). The base amount is indexed for inflation each year, in the same manner as tax brackets and non-refundable personal tax credits, and is the same as the Canada Employment Amount. The Canada Employment Amount for each year can be found in the Tables of Non-Refundable Tax Credits.

The Quebec calculation for the tool deduction for salaried tradespersons differs from the one described below. However, Quebec has a fillable form, TP-75.2-V, which you can complete, and it will calculate the appropriate deduction amount. See Revenu Quebec Deduction for the Purchase of tools.

What is an eligible tool for the tools deduction?

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 tools deduction calculated?

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

The deduction is the maximum of $1,000 ($500 for 2022 and earlier years) and X, where X = A - $1,368 (for 2023), and

A = the lesser of:

the total cost of eligible tools purchased in the taxation 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 2023 = $3,000
	Employment income as a tradesperson = $35,000
	Apprenticeship Completion Grant received = $1,500
	Apprenticeship Incentive Grant overpayment repaid = $550

X = A - $1,368

A = the lesser of

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

Therefore, X = $3,000 - $1,368 = $1,632, and
the allowable deduction is the lesser of $1,000 and $1,632, which is $1,000.

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.

Canada Revenue Agency (CRA) Resources

Line 22900 Other Employment Expenses

T4044 Employment Expenses - See Employed Tradespersons

Form T777 Statement of Employment Expenses