Are You an Apprentice?

By Randall Orser | Small Business

Have you recently become an apprentice for one of the trades or other? If so, you may be able to get some tax incentives. You can get a credit for the tools you have to buy, as well as the tuition and books you need to do the schooling for your trade.

Tradesperson’s Tools deduction

If you have purchased eligible tools to earn employment income as a tradesperson or apprentice, you may be able to deduct their cost, including any goods and services tax (GST), provincial sales tax (PST) or harmonized sales tax (HST) you paid.

An eligible tool is a tool (including associated equipment such as a toolbox) that:

  • you bought to use in your job as a tradesperson and was not used for any purpose before you bought it;
  • your employer certified as being necessary for you to provide as a condition of, and for use in, your job as a tradesperson; and
  • 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).

Maximum deduction for eligible tools is the lesser of:

a) $500; and

b) the amount, if any, determined by the formula

A − $1,161 where

A = the lesser of:

1. the total cost of eligible tools that you bought in 2016; and

2. your income from employment as a tradesperson for the year

  • plus, the amount you received in 2016 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 2016.

You are an eligible apprentice mechanic if you:

  • are registered in a program established under the laws of Canada or of a province or territory that leads to a designation under those laws as a mechanic licensed to repair self-propelled motorized vehicles (such as automobiles, aircraft, boats, or snowmobiles); and
  • are employed as an apprentice mechanic.

Eligible Apprentice Mechanic

As an eligible apprentice mechanic, you must first calculate the tradesperson's tools deduction (above), if any, that you qualify for.

You are an eligible apprentice mechanic if you:

  • are registered in a program established under the laws of Canada or of a province or territory that leads to a designation under those laws as a mechanic licensed to repair self-propelled motorized vehicles (such as automobiles, aircraft, boats, or snowmobiles); and
  • are employed as an apprentice mechanic.

An eligible tool is a tool (including associated equipment such as a toolbox) that:

  • you bought to use in your job as an eligible apprentice mechanic and was not used for any purpose before you bought it;
  • your employer certified as being necessary for you to provide as a condition of, and for use in, your job as an eligible apprentice mechanic; and
  • 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).

Tuition Tax Credit and licensing examination fees

If you have eligible tuition fees, as well as certain licencing examination fees, you may be able to claim them on your income tax and benefits return.

Examination fees paid to an educational institution, professional association, provincial ministry or other similar institution, to take an occupational, tradeor professional examination that is required to obtain a professional status recognized by federal or provincial statute, or to be licensed or certified as a tradesperson, to allow you to practice the profession or trade in Canada, may be eligible for the tuition tax credit. You should be provided with a receipt to substantiate your eligible exam fees. To view the information that should be contained in the receipt go to example of a receipt for licensing examination fee.

If you have more than one tax certificate, you can claim all amounts that are more than $100.

You cannot claim the tuition amount on your tax certificate if any of the following applies to you:

  • the fees were paid or reimbursed by your employer, or an employer of one of your parents, where the amount is not included in your or your parent's income;
  • the fees were paid by a federal, provincial, or territorial job training program, where the amount is not included in your income;
  • the fees were paid (or eligible to be paid) under a federal program to help athletes, where the payment or reimbursement has not been included in your income.

Education amount

You will have received a tax certificate from your educational institution indicating the number of months you were enrolled full-time (Box C) or part-time (Box B).

Full-time – Box C

For tax years prior to 2017, multiply $400 by the number of months indicated in Box C.

You can also claim the full-time amount if one of the following applies to you:

  • you were enrolled as a full‑time student;
  • you were enrolled part-time and you can claim the disability amount; or
  • you were enrolled part-time and you had a mental or physical impairment certified in a letter by a medical doctor, optometrist, audiologist, occupational therapist, psychologist, physiotherapist, or speech-language pathologist but you do not qualify for the disability amount.

Part-time – Box B

For tax years prior to 2017, multiply $120 times the number of months indicated in Box B.

You cannot claim the education amount if you:

  • received a grant, reimbursement, benefit, allowance or were reimbursed for the cost of your courses by your employer or another person with who you deal at arm's length;or
  • received a benefit as part of a program (such as free meals and lodging from a nursing school).

Textbook amount

You can claim only one textbook amount for each month that you qualify for the full-time or the part-time education amounts.

You can claim the textbook amount only if you can claim the education amount.

The amount is:

  • $65 times the amount in Box C of the certificate you received from your school; or
  • $20 times the amount in Box B of the certificate you received from your school.

This credit may disappear after 2017 tax year.

As an apprentice you have some great deductions you can claim against your income, and you should definitely take advantage of them come tax time. Just remember to keep receipts, and you have to have your employer sign a T2200 Declaration of Conditions of Employment.

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About the Author

President/CEO Number Crunchers® Accounting Inc. Learn how to just say stuff it to this bookkeeping thing with our 'Just Say: "Stuff It" To Bookkeeping program.