Deducting tools and equipment
A $400 drill and a $4,000 compressor are both 'tools,' but the tax system treats them completely differently. Get the split right and you deduct the small stuff in full this year instead of dragging it out.
The $500 line is the whole game
For tools, the number that decides how you deduct is roughly $500 per item.
- Under $500 — CCA Class 12, 100%. The full cost comes off this year. Hand tools, most cordless tools, small gear.
- $500 and up — CCA Class 8, 20%. Depreciated on a declining balance, so a $4,000 machine gives you roughly $800 in year one (with the half-year rule often halving the first year), then 20% of the shrinking balance after.
Practical upshot: don't lump a season of tool buying into one line. The under-$500 items are fully deductible now; splitting them out from the big equipment is free money you'd otherwise stretch across years.
Safety gear is its own clean deduction
Steel-toed boots, hard hats, hi-vis, respirators, gloves, hearing and eye protection — required protective equipment is deductible. The line the CRA draws is between genuine PPE (deductible) and ordinary clothing you happen to wear to work (not deductible). Trades PPE sits firmly on the deductible side.
The part that actually costs people money
None of this helps if the receipts are gone. Tools are a high-frequency, easy-to-lose expense, and a shoebox of faded thermal receipts in March is how real deductions quietly disappear. Whatever system you use, capture them as you buy them. Then put the total into the calculator and see what a full year of tracked tool spending does to your bill.
Common questions
Can I write off tools in the year I buy them?
Small tools costing under $500 generally go in CCA Class 12, which is deducted at 100% — the full cost comes off this year. Bigger equipment ($500 and up) usually falls in Class 8 at 20% declining-balance, so it's written off gradually. So yes for the cheap stuff, no for the expensive stuff.
What class are power tools in?
It depends on cost. A cordless drill or a set of hand tools under $500 each is Class 12 (100%). A larger, pricier machine — a big compressor, a tile saw, a plate compactor — is Class 8 (20%). The $500-per-item line is the practical dividing point contractors care about most.
Are steel-toed boots and safety gear deductible?
Protective clothing and safety equipment required for the work — steel-toed boots, hard hats, hi-vis, gloves, hearing and eye protection — are deductible business expenses. Ordinary clothing is not, even if you only wear it on site, but genuine PPE is a clean deduction.
Do I need receipts for tools?
Yes. Keep every receipt, because tools are a category the CRA looks at. This is exactly the kind of paperwork that piles up in a truck console all year — the reason a lot of trades use software to photograph and file receipts as they go rather than reconstructing it in April.