10 September 1997 Income Tax Severed Letter 9715145 - Small tools — deductibility from employment income

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.

SUMMARY: Small tools—deductibility from employment income—ITA-8(1)(i)—Whether small tools may be deducted from employment income by virtue of subparagraph 8(1)(i).

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 small tools may be deducted under subparagraph 8(1)(i)

POSITION: No.

REASONS: Not supplies consumed.

971514 XXXXXXXXXX Roxane Brazeau-LeBlond, CA

Attention: XXXXXXXXXX

September 10, 1997

Dear Sirs:

Re: Deductibility of Small Tools in Computing Income from Employment

This is in response to your letter of May 29, 1997, in which you requested our views on the above mentioned subject. More specifically you enquire about an employee who has obtained a signed Form T2200 from his employer certifying that the employee was required to pay for supplies that were used in employment, namely small tools including hammers, saws, pliers, wrenches, squares, ratchets, screwdrivers and hand held power tools. It is your understanding that these expenses are deductible pursuant to subparagraph 8(1)(i)(iii) of the Income Tax Act (the "Act").

Our Comments

Written confirmation of the tax implications inherent in particular transactions are given by this Directorate only where the transactions are proposed and are the subject matter of an advance ruling request. The procedures for requesting an advance income tax ruling are outlined in Information Circular 70-6R3 dated December 30, 1996. Where the particular transactions are completed, the enquiry should be addressed to the relevant Tax Services Office. However, we are prepared to provide the following comments which are of a general nature and are not binding on the Department.

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)(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.

Pursuant to subsection 8(2) of the Act, 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. Generally, subparagraph 8(1)(i)(iii) of the Act enables a taxpayer to deduct from income for a taxation year from an office or employment the cost of supplies that were consumed directly in the performance of the duties of his office or employment.

As reflected in paragraphs 9 and 10 of enclosed IT-352R2 entitled "Employee's expenses including work space in home expenses," the word "supplies" as used in subparagraph 8(1)(i)(iii) of the Act is limited to materials that are used up directly in the performance of the duties of the employment. It will usually include such items as the cost of gasoline and oil used in the operation of power saws owned by employees in woods operations, dynamite used by miners, bandages and medicines used by salaried doctors and various stationery items (other than books) such as pens, pencils, paper clips, charts, etc,, used by teachers. However, it will not include special clothing customarily worn or required to be worn by employees in the performance of their duties nor any types of tools which generally fall into the category of equipment.

We trust that these comments will be of assistance.

Yours truly,

R. Albert for Director Business and Publications Division Income Tax Rulings and Interpretations Directorate Policy and Legislation Branch