Turbotax: Claiming Tools & Expenses
Employed tradespersons
You may be able to deduct the cost of eligible tools you bought in 2024 to earn employment income as a tradesperson. This cost includes any GST and provincial sales tax (PST), or HST that you paid.
As an eligible apprentice mechanic, you must first calculate the tradesperson's tools deduction, if any, that you qualify for. For more information, go to Employed apprentice mechanics.
You may be able to get a rebate of the GST/HST you paid. For more information, see Employee GST/HST rebate. When completing Form GST370, Employee and Partner GST/HST Rebate Application, see if Situation 6 applies to you.
Eligible tools
An eligible tool is a tool (including associated equipment such as a toolbox) that meets all of the following conditions:
- You bought it to use in your job as a tradesperson and it was not used for any purpose before you bought it
- Your employer certified it as being necessary for you to provide as a condition of, and for use in, your job as a tradesperson
- It 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)
Your employer has to complete Form T2200, Declaration of Conditions of Employment. Have your employer complete question 12 of Part C of the form to certify that the tools being claimed were bought and provided by you as a condition of your employment as a tradesperson. Attach to Form T2200 a list of the tools you are claiming, as well as the related receipts. You do not have to include Form T2200, your receipts, or your list of tools with your income tax and benefit return, but keep them in case the CRA asks to see them.
Deduction for tools
If you were a tradesperson in 2024, use the following formula to calculate your maximum tradesperson's tools deduction for the cost of eligible tools you bought in 2024.
Maximum deduction for eligible tools is the lesser of:
a) $1,000
b) the amount, if any, determined by the formula
A − $1,433
where
A = the lesser of:
1. the total cost of eligible tools that you bought in 2024
2. your income from employment as a tradesperson for the year
plus the amount you received in 2024 under the Apprenticeship Incentive Grant and the Apprenticeship Completion Grant programs
minus the amount of any Apprenticeship Incentive Grant and Apprenticeship Completion Grant overpayments that you had to repay in 2024
Example
In 2024, Karsten is employed as an electrician with ABC Company, and he needs to purchase additional tools for his job. He paid $2,500 for the tools he needed and he earned $45,000 in employment income in 2024 as an electrician.
He calculates his maximum deduction for eligible tools in 2024 as follows:
Maximum deduction for eligible tools is the lesser of:
a) $1,000
b) the amount, if any, determined by the formula
A − $1,433
where
A = the lesser of:
1. $2,500
2. $45,000
Karsten's maximum deduction for 2024 is the lesser of $1,000 and $1,067 ($2,500 − $1,433). Karsten claims a deduction of $1,000 on line 22900 of his 2024 income tax and benefit return.
Completing Form T777
Enter your claim on the Tradesperson's tools expenses line (1770) of Form T777, Statement of Employment Expenses.
Disposition of tools
As a tradesperson (including an apprentice mechanic), you may decide to sell any or all of the eligible tools for which you claimed a deduction. If so, you must include, in your income in the year you sold the tool(s), the amount by which the proceeds of disposition of each tool is greater than the adjusted cost of the eligible tool sold. The proceeds of disposition of a tool is the amount of money you sold the tool for.
If you are an employed apprentice mechanic, go to Disposition of tools for an eligible apprentice mechanic to calculate the adjusted cost of the tools you purchased.
Adjust the original cost of each eligible tool you bought by using the following formula :
Adjusted cost of an eligible tool = D − (D x [E/A])
where
D = the original cost of each eligible tool that you bought in 2024
E = the total of the tradesperson's tools deduction that you claimed in 20241
A = the total cost of all eligible tools that you bought in 20242
Complete a separate calculation for each eligible tool you bought in 2024.
Example
Bill bought two eligible tools for $4,500. Tool A and Tool B cost $2,500 and $2,000, respectively. Bill must calculate the adjusted cost of these tools. He calculates the adjusted cost of Tool A as follows:
Adjusted cost of Tool A = D − (D x [E/A])
where
D = $2,500
E3 = $1,000 + $2,067 = $3,067
A = $4,500
By applying this formula, the adjusted cost of Tool A is:
$2,500 − ($2,500 x [$3,067/$4,500])
= $2,500 − $1,704
= $796
Similarly, the adjusted cost of Tool B is $637:
$2,000 − ($2,000 x [$3,067/$4,500])
Assume that Bill sells Tool A in 2025 for $1,500. The proceeds of disposition of Tool A ($1,500) is greater than its adjusted cost ($796). As a result, he would have to include the amount of $704 ($1,500 – $796) as income on line 13000 of his 2025 income tax and benefit return. If the proceeds of disposition had been less than the adjusted cost of the tool, Bill would not have been able to deduct the difference.
Completing Form T777
Enter your claim on the Tradesperson's tools expenses line (1770) of Form T777, Statement of Employment Expenses.
Completing your tax return
Enter on line 22900, the allowable amount of your employment expenses from the Total expenses line of Form T777, Statement of Employment Expenses... (Employed tradespersons - Canada.ca)
***
Comments
Post a Comment