Canada Revenue Agency
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Deduction for tools for an eligible apprentice mechanic
Even though you may have already claimed the tradesperson's deduction for tools, you may also be able to deduct a part of the cost of eligible tools you bought in 2011 to earn employment income as an eligible apprentice mechanic.
Use the following formula to calculate your maximum deduction for the cost of eligible tools you bought in 2011 if you were an eligible apprentice mechanic at any time in 2011:
Maximum deduction for eligible tools* = (A - B) + C
where
A = the total cost of eligible tools that you bought in 2011**
B = the lesser of:
1. the total cost of eligible tools that you bought in 2011 as calculated in A; and
2. the greater of:
- $500 + the Canada employment amount claimed on line 363 of Schedule 1 (max. $1,065); and
- 5% of:
- your employment income as an eligible apprentice mechanic;
- plus the amount you received in 2011 under the Apprenticeship Incentive Grant and the Apprenticeship Completion Grant programs;
- minus any claim you made for the tradesperson's deduction for tools, and the amount of any Apprenticeship Incentive Grant and Apprenticeship Completion Grant overpayments that you had to repay in 2011.
C = the amount, if any, of the maximum deduction for eligible tools that you calculated for 2010 that you did not claim in 2010 (your carry forward amount from 2010, if any).
* This claim cannot be more than your net income for 2011 from all sources (the claim cannot create a non-capital loss).
** If you become employed as an eligible apprentice mechanic for the first time during 2011, you will be able to increase the value of A in the above calculation by the cost of eligible tools you bought during the last three months of 2010.
Note
If you do not want to claim the maximum deduction, you can carry forward the unused amount for use against income earned in a future year. You can deduct the unused amount against any type of income in a future year even if you are no longer employed as an eligible apprentice mechanic at that time.
Example
The Motor Company hired Bill as a second-year eligible apprentice mechanic on November 1, 2010. Based on the tools he bought during 2010, Bill calculated his maximum deduction for eligible tools in 2010 to be $3,500. He only claimed $1,500 of this amount on his 2010 return. In 2011, Bill received $18,000 in income from his job as an eligible apprentice mechanic. In 2011, he received $1,000 under the Apprenticeship Incentive Grant program, and he also received income of $4,000 from other sources.
During September of 2011, Bill bought two eligible tools for $4,500. He already calculated and claimed a tradesperson's tool deduction of $500 for 2011. He had also claimed a Canada employment amount of $1,065.
Bill calculated his maximum deduction for eligible tools in 2011 as follows:
Maximum deduction for eligible tools = (A - B) + C
where
A = $4,500
B = the lesser of:
1. $4,500; and
2. the greater of:
- $500 + $1,065; and
- $925 [5% of ($18,000 + $1,000 - $500)]
C = $2,000
Therefore, Bill 's maximum deduction in 2011 is $4,935
([$4,500 - $1,565] + $2,000). Bill 's claim for the year cannot be more than his net income of $22,500 ([$18,000 + $1,000 - $500] + $4,000).
Bill claims his deduction on line 229 of his return.
Completing your tax return
Enter your claim on the Apprentice mechanic tools expenses line (9131) of Form T777, Statement of Employment Expenses.
