19 February 2007 Internal T.I. 2006-0216591I7 - Meaning of "tradesperson"

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.

Principal Issues: How should the term "tradesperson" in proposed new paragraph 8(1)(s) be interpreted.

Position: The term tradesperson should be interpreted using its ordinary or everyday meaning. In this regard, there is no requirement that a tradesperson need be registered.

Reasons: There is no definition of this term in the Act.

								February 19, 2007

	Audit Services					HEADQUARTERS
	Vancouver TSO					J. Gibbons, CGA
(819) 458-3538
	Attention:  Bernie Lum
								2006-021659

Meaning of "Tradesperson"

We are responding to your email dated November 27, 2007, concerning the meaning of a "tradesperson" for purposes of proposed paragraph 8(1)(s) of the Income Tax Act (the "Act"). In general terms, this new measure will provide a deduction from income for the year for an employed tradesperson in respect of the cost of "eligible tools," as defined in proposed subsection 8(6.1) of the Act, acquired by the tradesperson in the year to the extent that the cost exceeds $1,000.

Since there is no definition of "tradesperson" in the Act, we are of the view that this term should be interpreted using its ordinary or everyday meaning. For example, The Concise Oxford Dictionary (8th edition) defines a "tradesman" as "a person engaged in trading or a trade, esp. a shopkeeper or skilled craftsman" and a "trade" as "a skilled handicraft esp. requiring an apprenticeship." The Dictionary of Canadian Law defines a "tradesperson" as "a person other than an apprentice, who works for remuneration at any designated trade, including an employer who so works" and a "trade" as "includes industry, craft, and business, and any branch of any industry, craft or business."

Notwithstanding the latter definition of the term "tradesperson" above, we are doubtful whether any inference can be made that there is a requirement that a tradesperson be registered. In our view, the new provision would contain such a requirement if that were the intention, similar to the apprentice mechanics' tools cost deduction under paragraph 8(1)(r) of the Act. Accordingly, it is our view that any person engaged in an occupation that demands a certain level of skill may be considered a tradesperson for purposes of the deduction, whether the person is registered or not.

Although, in theory, a distinction could be drawn between tradespersons, as defined above, and unskilled workers who may not qualify for the new tradesperson's tool expenses deduction, in practice, it may not be necessary to be overly concerned about this issue. Namely, only tradespersons would ordinarily be required by their employers to purchase "eligible tools" that would exceed a total cost of $1,000 in a year.

If we can be of any further assistance, please feel free to contact the author at the above-noted number.

Yours truly,

Randy Hewlett
for Director
Business and Partnerships Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch