Hidden expenses your trades business can claim

As the owner of a skilled trades business, you likely spend thousands of dollars each year on vehicle expenses, equipment maintenance and tools.

As the owner of a skilled trades business, you likely spend thousands of dollars each year on vehicle expenses, equipment maintenance and tools. The good news is many of your business-related expenses are 100% tax deductible – and tax credits also exist to help reduce your overall tax bill.

Learn more about the legitimate deductions you can take and use to save on taxes this year.

Apprenticeship Job Creation Tax Credit (AJCTC)

The Apprenticeship Job Creation Tax Credit (AJCTC) is a non-refundable tax credit equal to 10% of the salaries and wages you’ve paid to eligible apprentices employed over the relevant tax year. As the employer, you can claim up to $2,000 per year for each eligible apprentice.

Hired apprentices are eligible for the tax credit if they meet the following criteria:

  • The apprentice is in the first two years of their apprenticeship contract; and
  • The employment contract is registered with a federal, provincial, or territorial government under an apprenticeship program designed to certify or license individuals in the trade.

If you weren’t eligible to claim the AJCTC this year but your business is growing, keep it in mind when tax planning for the year ahead. Also look into provincial tax credits available for trades businesses, like the Ontario Apprenticeship Training Tax Credit and the Training Tax Credit available in British Columbia.

Tradesperson tools deduction

If you’re earning income as a tradesperson or apprentice, you may be able to deduct up to $500 for the cost of eligible tools.

To determine if you qualify for the full deduction amount, use this formula on the Canada Revenue Agency website to calculate your eligibility. You may also qualify for a rebate on any GST/HST you spent on tools.

Take note: if you’re self-employed, tools purchased for your business also count as a deductible business expense.

Tax deductible expenses

Tradespeople and owners of trades businesses can claim a number of tax deductible expenses that can shave thousands off their tax bill.

For example, you’ve probably leased or purchased a vehicle for work. You can write off your monthly lease payments proportionate to business usage, or, if you own it, you can deduct depreciation on your business vehicle.

You can also claim maintenance, repairs and travel expenses such as fuel, oil changes and insurance. If you use the vehicle for a mix of personal and business travel, be sure to log your work-related kilometres so you can claim them as an expense.

As an independent contractor, you can also deduct a portion of your business expenses related to your home office, such as:

  • Rent payments or mortgage interest.
  • Property taxes.
  • Home insurance.
  • Utilities.
  • Phone or Internet.

Computer purchases are tax deductible over several years, including desktop computers, laptops, tablets, and related hardware. Software is typically 100% deductible within the first year.

It’s much easier to keep track of these expenses using accounting software, so consider investing in the right accounting solution for your business. Being organized with your numbers means you won’t miss out on any eligible tax deductions. Better yet, if you’re ever audited, you’ll be prepared.  

(This information is presented for educational purposes only and should not be considered as tax advice. Be sure to consult with a qualified tax specialist to obtain tax advice specific to your business or personal situation.)

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