Tax and Accounting for Tradespeople

Most tax rules for tradespeople depend on who pays you. On an employer's payroll, one set of rules covers your tools and travel. Invoice your own customers and you're running a business, with different paperwork.

If you're employed in a trade

• Tradesperson's tools deduction. For the 2025 tax year (filed in spring 2026), you can deduct the cost of eligible new tools above $1,471, up to $1,000. Your employment income as a tradesperson also limits it. Your employer has to certify on Form T2200 that you had to supply the tools for the job. Keep it, the receipts and a list of the tools in case the CRA asks. Cell phones and computers don't qualify unless the device can only be used to measure, locate or calculate. The CRA hadn't posted 2026 figures as of October 2026.
• Apprentice mechanics. If you're employed as an apprentice mechanic in a registered program leading to a licence to repair vehicles such as cars, boats or snowmobiles, you may be able to deduct part of your tool costs on top of the tradesperson's deduction. An amount you don't claim can carry forward.
• Labour mobility deduction. If you're employed in construction as a tradesperson or apprentice and stay in temporary lodging to work at a job site away from home, you may be able to deduct one round trip, the meals on that trip, and the lodging. The job has to keep you away from home for at least 36 hours. For 2025, the CRA's T4044 guide caps the deduction at $4,000, and the lodging has to be at least 150 km closer to the work site than your home is. An amendment to the Income Tax Act raises the cap to $10,000 and lowers the distance to 120 km for 2026 and later years.

Tool claims go on Form T777, Statement of Employment Expenses, one of the government forms we fill out for clients.

If you work for yourself

• Income tax. Business income and expenses go on Form T2125 with your personal return. See our post on self-employed tax returns.
• GST. Once your taxable sales go over $30,000 in a single calendar quarter, or over four consecutive calendar quarters added together, you stop being a small supplier and have to register. The exact timing differs between the two. More in our post on GST filing.
• T5018 slips. If more than half your business income comes from construction and you pay Canadian resident subcontractors for construction services, you report each one you paid more than $500 in the year (not counting GST/HST) on a T5018 slip. The return is due six months after the end of the reporting period you chose (calendar year or fiscal period). See T-slip filing.

WorkSafeBC

Employers need WorkSafeBC coverage unless they're exempt, and hiring unregistered subcontractors makes you an employer. A self-employed proprietor or partner with no workers doesn't have to register, but may be able to buy Personal Coverage.

Hiring other trades takes more care. A contractor who supplies only labour (or labour plus minor materials like nails or drywall tape), or who works regular hours for you, is likely your worker. Get a clearance letter before and after the work so you aren't stuck paying premiums a contractor didn't. More in our post on WorkSafeBC filing.

How we help

Skilled tradespeople are one of the groups we work with. We prepare self-employed returns, sort out what counts as a business expense and keep the paperwork tidy enough to defend. We also handle GST, payroll, WorkSafeBC and T-slip filings, and employment expense forms.