Disposition of tools for an eligible apprentice mechanic
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Disposition of tools for an eligible apprentice mechanic
As a tradesperson (including an apprentice mechanic), you may decide to sell any or all of the eligible tools for which you claimed a deduction. If so, you must include, in your income in the year you sold the tool(s), the amount by which the proceeds of disposition of each tool is greater than the adjusted cost of the eligible tool sold. The proceeds of disposition of a tool is the amount of money you sold the tool for.
Adjust the original cost of each eligible tool you bought by using the following formula:
Adjusted cost of an eligible tool = D − [D x (E/A)]
where
D = the original cost of each eligible tool that you bought in 2023
E = the total of the tradesperson's tools deduction and apprentice mechanic tools deduction that you claimed in 2023Note de bas 1
A = the total cost of all eligible tools that you bought in 2023Footnote 2
- Footnote 1
-
In the case of the apprentice mechanic tools deduction, always assume there is no carryover amount (C = 0) when calculating E. See Deduction for tools for an eligible apprentice mechanic for the meaning of C.
- Footnote 2
-
If you made a claim for both the tradesperson’s tools deduction and the apprentice mechanic tools deduction, use the value of A that was greater.
Complete a separate calculation for each eligible tool you bought in 2023.
- Example
Bill bought two eligible tools for $4,500. Tool A and Tool B cost $2,500 and $2,000, respectively. Bill must calculate the adjusted cost of these tools. He calculates the adjusted cost of Tool A as follows:
Adjusted cost of Tool A = D − [D x (E/A)]
where
D = $2,500
EFootnote 3 = $1,000 + $2,132 = $3,132
A = $4,500
- Footnote 3
-
The value of E is the total of the tradesperson's tools deduction of $1,000 and the apprentice mechanic tools deduction of $2,132, which is $4,132 (from Deduction for tools example) minus the carryover amount of $2,000 from 2022 ($4,132 − $2,000 = $2,132).
By applying this formula, the adjusted cost of Tool A is:
$2,500 − [$2,500 x ($3,132/$4,500)]
= $2,500 − $1,740
= $760
Similarly, the adjusted cost of Tool B is $608:
$2,000 − [$2,000 x ($3,132/$4,500)].
Assume that Bill sells Tool A in 2024 for $1,500. The proceeds of disposition of Tool A ($1,500) is greater than its adjusted cost ($760). As a result, he would have to include the amount of $740 ($1,500–$760) as income on line 13000 of his 2024 income tax and benefit return. If the proceeds of disposition had been less than the adjusted cost of the tool, Bill would not have been able to deduct the difference.
Completing your tax return
Enter your claim on the Tradesperson's tools expenses line (1770) of Form T777, Statement of Employment Expenses.
Forms and publications
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- Date modified:
- 2024-01-23