10 September 2001 External T.I. 2001-0091035 - EMPLOYMENT EXPENSES-TOOLS

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues: Whether tools can be deducted as an employment expense under section 8 of the income Tax Act.

Position: No

Reasons: There is no employment expense provision that allows such an expense.

XXXXXXXXXX 2001-009103
M. Eisner, CA
September 10, 2001

Dear XXXXXXXXXX:

Re: Deductibility of Tools as an Employment Expense

Your letter of March 22, 2001, which concerns the above-noted subject, was forwarded to us for reply by our Windsor Tax Services Office.

You have indicated that it is your understanding that employees, who are required by their employers to purchase their own tools, are not allowed to claim the cost of the tools on their income tax returns. This would be the case whether or not the employer provides the employee with form T2200.

You have asked us to confirm your understanding.

Our Comments

Written confirmation of the tax implications inherent in particular transactions is given by this Directorate only where the transactions are proposed and are the subject matter of an advance income tax ruling request submitted in the manner set out in Information Circular 70-6R4, dated January 29, 2001. However, we are providing the following general comments in respect of your situation.

Pursuant to subsection 8(10) of the Income Tax Act (the "Act"), form T2200 is the prescribed form which must be signed by an employer certifying that the required conditions were met in order for an employee to claim deductions under paragraphs 8(1)(c), (f), (h), or (h.1), as well as subparagraphs 8(1)(i)(ii) or (iii) of the Act. Although the signing of the T2200 by the employer is a prerequisite in order for an employee to be able to claim a deduction for certain employment expenses, a signed T2200 does not provide an employee with any assurance that any expenses incurred are deductible since the Act contains other criteria that the employee must satisfy.

Subparagraph 8(1)(i)(iii) of the Act provides a deduction in computing income from employment for the cost of supplies consumed directly in the performance of the duties of employment when the employee is required to provide and pay for such supplies. For this purpose, the ordinary meaning of supplies and equipment apply. An item that is consumed is something which is used up as it is used and cannot normally be used more than once. While equipment wears out over time, sometimes within a taxation year, it is expected to be used more than once with no appreciable loss of substance. Accordingly, as reflected in paragraph 10 of enclosed IT-352R2 entitled "Employee's Expenses Including Work Space in Home Expenses", "supplies" do not include any types of tools which generally fall into the category of equipment.

By virtue of subsection 8(2) of the Act, which provides that no deduction may be made in computing a taxpayer's income from employment except those that are specifically provided by section 8 of the Act, it is our view that there is no other provision under which employees could deduct the cost of tools.

We trust that our comments are of assistance to you.

Yours truly,

Milled Azzi, CA
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Policy and Legislation Branch

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