Because you can claim the tools under either the Tools deduction or as business expenses, you'll need to decide which works better for you. Here are a couple of things to keep in mind.
If you claim the tools as an Employment expense:
- You must have a completed Form T2200, signed by your employer.
- The cap for this expense is $500.
If you claim the tools as a business expense:
- There is no cap on the expense.
- Tools are considered to be of long-lasting value. Therefore, they are entered as Capital Assets (in the CCA section) and are depreciated over time. How much time and at what rate depends on the tool type and cost.