Under the deduction for tradespeople’s tool expenses, a tradesperson can claim
a deduction of up to $500 of the amount by which the total cost of eligible new
tools acquired in a taxation year as a condition of employment exceeds the
amount of the Canada Employment Credit ($1,368 in 2023). The total cost of
eligible new tools cannot exceed the total of the employment income earned
as a tradesperson and any apprenticeship grants received to acquire the tools,
which are required to be included in income.
Budget 2023 proposes to double the maximum employment deduction for
tradespeople’s tools from $500 to $1,000, effective for 2023 and subsequent
taxation years.
As a consequence of this change, extraordinary tool costs that are eligible to
be deducted under the apprentice vehicle mechanics’ tools deduction would
be those costs that exceed the combined amount of the increased deduction
for tradespeople’s tool expenses ($1,000) and the Canada Employment
Credit ($1,368 in 2023) or five per cent of the taxpayer’s income earned as
an apprentice mechanic (including from apprenticeship grants), whichever
is greater.
*The preceding information is for educational purposes only. As it is impossible to include all situations, circumstances and exceptions, a further review should be done by a qualified professional. No individual or organization involved in either the preparation or distribution of this text accepts any contractual, tortious, or any other form of liability for its contents.
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