Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
May 15, 2000
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable Martin Cauchon, Minister of National Revenue, has asked me to reply to your letter addressed to your Member of Parliament, XXXXXXXXXX, concerning the issue of automotive technicians who are required under the terms of their employment to purchase their own tools. The office of the Honourable Paul Martin, Minister of Finance, sent a copy of your letter to Mr. Cauchon on March 20, 2000.
The Income Tax Act provides a deduction in computing income from employment for the cost of supplies consumed directly in the performance of the duties of employment when the employee is required to provide and pay for such supplies. For this purpose, the ordinary meaning of supplies and equipment apply. An item that is consumed is something which is used up as it is used and cannot normally be used more than once. While equipment wears out over time, sometimes within a taxation year, it is expected to be used more than once with no appreciable loss of substance, As there is no provision which could permit a deduction of either the cost of automotive tools or an allowance for automotive tools, an employee is not entitled to a deduction in respect of equipment.
The issue of deductions for employees' expenses has previously been discussed before the House of Commons Standing Committee on Finance. The Committee received submissions from the Canadian Automobile Repair Service Institute regarding this issue. Attached is a copy of the Committee's report tabled in the House of Commons on June 10, 1992, which highlights some of the difficulties in finding an equitable solution to this issue.
An amendment to the Income Tax Act would be required in order to permit employees a deduction for capital cost allowance in respect of equipment that must be supplied by the employees. The Canada Customs and Revenue Agency is responsible for the administration of the Income Tax Act. Accordingly, any changes to the tax policy or amendment to the legislation would have to be considered by the Department of Finance. In this regard, I note that XXXXXXXXXX office sent a copy of your letter to the Honourable Paul Martin, Minister of Finance, for consideration.
I appreciate the opportunity to address your concerns.
Yours sincerely,
Bill McCloskey Assistant Commissioner Policy and Legislation Branch
Attachment