Can I Write Off My Tools as a Contractor in BC?

Short answer: Yes, if you're self-employed or incorporated and the tool is used to earn your business income. Each tool that costs less than $500 can be written off in full in the year you buy it. A tool that costs $500 or more is claimed over several years instead, at 20% a year on the remaining balance.

Tools under $500: the full write-off

CRA puts tools that cost less than $500 each in capital cost allowance (CCA) Class 12, which has a 100% rate. In plain terms, you deduct the whole cost in the year you buy it. Most small tools in Class 12 also skip the half-year rule that cuts other first-year claims in half.

The $500 limit is per tool, not per receipt. A $1,100 run to the tool store made up of a $389 impact driver, a $279 oscillating multi-tool and a $430 laser level is three Class 12 tools, all claimed in full.

Tools $500 and over: claimed over time

A tool that costs $500 or more goes in Class 8, at 20% a year on the declining balance. You don't get the whole cost back in year one; you claim a piece each year until it's used up.

The first year normally gets only half the usual claim (the half-year rule). For equipment put to use from 2024 to 2027, the federal accelerated investment incentive generally doubles that first-year amount, which brings it back to a full 20%.

Blades, bits and other supplies

Things that get used up on the job, like saw blades, drill bits, fasteners, sandpaper and caulking, are supplies, not tools. In most cases they're a regular expense in the year you buy them.

What changes the answer

  • Personal use: if the tool also gets used at home, claim only the business share.
  • GST: if you're registered for GST, claim back the GST you paid as an input tax credit. What's left (including PST) is the cost you use for CCA.
  • Incorporated: the corporation buys the tool and claims it on its own return. Keep receipts in the company's name, and don't claim the same tool on your personal return.
  • Employees: a tradesperson on a T4 can't use these rules, but has a separate deduction of up to $1,000 a year (see the FAQ).

Worked example (an example, not your numbers)

A self-employed finishing carpenter in Kelowna, registered for GST, buys these in 2026 (amounts after the GST is claimed back):

  • Impact driver $389, multi-tool $279, laser level $430: three tools under $500 each, so Class 12. Claim: $1,098 in 2026.
  • Blades, bits and fasteners $310: supplies. Claim: $310 in 2026.
  • Jobsite table saw $2,400: Class 8. Under the incentive for 2024 to 2027, the first-year claim is about $480 (20% of $2,400). The remaining $1,920 is claimed at 20% a year after that: about $384 in 2027, $307 in 2028, and so on.

Total tool and supply deductions for 2026 in this example: about $1,888. Your tax saving depends on your income and tax bracket.

FAQ

Can I write off a tool I bought used?

Yes, if you're self-employed or incorporated. A used tool goes in the same class as a new one, based on what you paid for it. (The employee tool deduction is different: it only counts tools that weren't used before you bought them.)

Does the $500 limit count the whole receipt or each tool?

Each tool. Several tools on one receipt that are each under $500 are all Class 12.

My guys are employees and buy their own tools. Can they claim them?

Possibly. An employed tradesperson can deduct up to $1,000 a year of new tools their job requires. You, as the employer, sign Form T2200 to confirm the tools are a condition of the job. The deduction only counts the part of their tool costs above $1,471 (the 2025 amount), and cell phones and computers don't count. They may also get a GST rebate on those tools.

Do I need to keep receipts?

Yes. Keep the receipt for every tool and a simple list of what you bought, when and what it cost. CRA can ask for them if your return is reviewed.

Is my work truck a tool?

No. Vehicles have their own classes and rules, and you can only claim the business-use share. The free Vehicle Claim Calculator works out your business-use percentage and what you can claim: Vehicle Claim Calculator

I'm incorporated. Do I claim tools on my personal return?

No. If the corporation paid for the tool, the corporation claims it on its T2 return. If you paid personally for a tool the company uses, talk to your accountant about how to get it onto the company's books properly.

Free tools that help with this

  • Contractor Books Workbook: paste in your bank download, pick a category, and your GST and year-end numbers fill themselves in, so tool purchases don't get lost. Contractor Books Workbook
  • Year-End Readiness Check: answer 10 questions and get a checklist of what to gather before year end. Year-End Readiness Check
  • GST Check: do you have to register, when are your returns due, and would the Quick Method help you. GST Check

More on what counts as a business expense: What counts as a business expense

CCA has edge cases (tools you owned before the business started, selling or trading in equipment, tools used partly for personal projects). If you're not sure how your situation works, talk to your accountant about your specifics, or we can look at it with you.

How Murtagh & Co. Can Help.

We work with trades and construction businesses across the Okanagan on bookkeeping, GST and tax. We can sort your tool purchases into the right classes, make sure the GST you paid is claimed back, and carry the balances forward so nothing is missed in later years.

Murtagh & Co. was founded by Devon Murtagh, CFA, FRM, a former trades business owner.

Prefer to talk it through? Book a free 30-minute call at a time that works for you, or reach out at info@murtaghco.ca.

More free tools for contractors: see the Contractor Toolkit