Ten tax deductions tradespeople often overlook

Start with the section for your situation: self-employed contractor, incorporated owner or employed tradesperson.

This guide is written for sole proprietors who report on Form T2125. If you work through your own corporation, the same expense rules apply to the company's return, and you are an employee of your company, so anything you pay personally follows the employee rules below. Costs the corporation pays or reimburses are claimed by the corporation.

If you're employed, most of the deductions below don't apply to you: employees generally can't deduct their costs, apart from what the employment-expense rules allow, usually with a T2200 signed by the employer. The Employee column in the table below and the apprentice example in section 2 show what can be claimed.

1. Vehicle expenses and the logbook

If you use a truck, van or car for the business and personally, you deduct the business part of the running costs: fuel, insurance, repairs and maintenance, licence and registration, lease payments or interest on the loan. The business part is business kilometres divided by total kilometres for the year. Parking at job sites and supplementary business insurance are deductible in full. Driving between home and a regular shop or yard is personal; driving from the shop to jobs, between jobs, and to suppliers is business.

The vehicle itself is a capital cost, claimed through capital cost allowance (CCA). Most trucks and vans go in Class 10 at 30% a year. A passenger vehicle bought in 2026 for more than $39,000 before tax goes in its own Class 10.1, and the claim is capped at $39,000 plus GST and PST. Whether a pickup counts as a passenger vehicle depends on its seating and how it's used. For leases signed in 2026 the deductible lease cost is capped at $1,100 a month before tax, and loan interest at $350 a month. These limits apply to passenger vehicles. The vehicle's classification matters; they are not caps for every commercial truck.

Records: a logbook with the date, destination, purpose and kilometres of each business trip, plus the odometer reading at the start and end of the year. After one full year of logbook (the base year), the CRA accepts a simplified logbook in later years: compare a representative three-month period with the matching base-year period using the CRA's formula. The annual business-use percentage worked out must stay within 10 percentage points of the base year. Keep that base-year logbook for six years after the last year you rely on it, and keep every fuel, repair and insurance receipt.

2. Tools and equipment

For a self-employed tradesperson, tools aren't written off as supplies. They're depreciable property, claimed through CCA. A tool that cost less than $500 goes in Class 12 at 100%, and most small tools in Class 12 aren't subject to the half-year rule, so they can be deducted in full in the year you buy them. Many ordinary tools costing $500 or more belong in Class 8 (20% a year), but equipment can belong to another class. Confirm the class before applying a rate. Phones, tablets and computers aren't Class 12 tools; they have their own classes. When you sell or trade in a tool, it comes out of the class.

If you're an employee, you can't claim CCA on tools, but you may be able to claim the tradesperson's tools deduction on line 22900. For 2026 it is the lesser of $1,000 and the cost of eligible tools above $1,501 (the threshold was $1,471 for 2025). An eligible tool is new, bought for your job, and certified by your employer on Form T2200 (Part C, question 12) as a condition of your employment. Cell phones and other electronic devices don't count unless they only measure, locate or calculate. Eligible apprentice mechanics can claim a further amount for their tools on top of this, with the employer answering question 13 of the T2200.

Records: receipts and a running list of tools with the date and cost, so each one lands in the right class and comes out when you sell it. Employees also keep the signed T2200 and the list of certified tools; you don't send them with your return, but the CRA can ask for them.

3. Safety gear and work clothing

Everyday clothes aren't deductible, even if you only wear them on site. Protective gear you buy because the work requires it is different: CSA-rated boots, hard hats, high-visibility vests, safety glasses, hearing protection, gloves, fall-protection harnesses, welding gear and site rain gear are costs of earning your business income, and a self-employed tradesperson can deduct them in the year they're bought. The CRA doesn't publish a list for the self-employed; the test is the general one, a reasonable expense incurred to earn income, so keep it to gear that is genuinely for the work.

For employees, the CRA is blunt: most employees cannot claim employment expenses, and the cost of most tools and clothing is personal. That includes boots and work clothes. If your employer requires safety gear, ask whether they provide it or reimburse it.

Records: receipts, and a note of which job or site rule called for the gear if it isn't obvious.

4. Phone and internet

You can deduct the business share of your cell phone plan, and of a landline or internet service you use to earn income. The CRA allows the percentage of airtime and data that reasonably relates to earning your self-employment income, not the whole bill. The handset itself isn't an expense: if you buy a phone or tablet, you claim CCA on the business share instead, and the business share of the interest if you financed it. Home internet used from a home office goes in with your business-use-of-home expenses.

Records: the monthly bills and a reasonable basis for the business share, for example a month's call and data pattern, or a dedicated business line. If you put the business line in the company's or the business's name, the split is easier to show.

5. Home office

If you quote, invoice, order materials and keep your books from home and have no shop, your home is probably your principal place of business, and you can claim business-use-of-home expenses on Form T2125: the business share of heat, electricity, insurance, maintenance, rent or mortgage interest and property tax, worked out by the area of the work space over the area of the home, and by hours if the space is also used for living. If you rent a shop that is your main base, the home space has to be used only for the business and regularly to meet clients to qualify. Home office expenses can't create or increase a loss; the unused amount carries forward. Claiming CCA on your home is allowed but usually avoided because of what it does to the principal residence exemption.

The rules for employees (a signed T2200 and the detailed method) and for owners of corporations are covered in our home office tax deductions guide.

Records: the floor area of the work space and of the home, and the year's utility, insurance, property tax and mortgage interest statements.

6. Meals on the road

Lunch on a local job is a personal cost, the same as for anyone else who works away from a desk. Meals become a business expense when you travel for work, for example an out-of-town job that keeps you away overnight, or when you take a client or supplier for a meal. Even then, you can deduct only 50% of the lesser of what you paid and an amount that is reasonable in the circumstances. The same 50% limit applies to the input tax credit on those meals.

Construction has a few exceptions to the 50% limit. If you bill the meal costs to your client and show them on the invoice, they're not limited. Meals you provide to employees at a temporary work camp built to house them at a construction site they can't go home from each day aren't limited either. Nor are meals you include in an employee's income for work at a special work location at least 30 km from the nearest urban centre of 40,000 people or more. Long-haul truck drivers have their own 80% rule, which doesn't apply to trades.

Records: the receipt, with a note of who the meal was with and the business reason, or the job it was for.

7. Licences, certifications, dues and training

A self-employed tradesperson can deduct annual business licence fees (such as a municipal business licence), trade qualification renewals, annual dues to a trade or commercial association, and trade publications. Dues to a club whose main purpose is dining, recreation or sport aren't deductible, including initiation fees. An employee claims annual union dues and professional dues required by law on line 21200 of the return; the amount is in box 44 of the T4, or on a receipt from the union. Initiation fees, licences and special assessments aren't "annual dues", and if the dues appear on both the T4 and a receipt, claim them once.

Training depends on what it's for. A course that maintains or upgrades the skills you already use in your trade, such as a code update or a safety recertification, is generally a current business expense. Training for a new trade or a new qualification is generally a capital cost rather than an expense, and the tuition tax credit may apply instead if the school issues a T2202. This is one to check with your facts.

Records: receipts for licences and dues; for employees, the T4 or the union receipt; for training, the course outline and the receipt or T2202.

8. Insurance and bonding

Ordinary commercial insurance premiums on the equipment and premises you use in the business are deductible: commercial general liability, tool and equipment coverage, and insurance on a shop or storage unit. Commercial vehicle insurance is claimed as part of your motor vehicle expenses, not here, and home insurance for a home office is claimed as part of your business-use-of-home expenses. Life insurance premiums generally aren't deductible, unless the policy is collateral for a business loan and only within limits. Disability and critical illness premiums you pay for yourself aren't deductible either.

Bid and performance bonds and other surety premiums that a contract requires are a cost of getting the work. They're generally deductible in the year they relate to; a premium paid in advance for a bond that runs into next year is a prepaid expense, deducted as the period passes.

Records: the policy documents and premium invoices, with the period each one covers.

9. Subcontractors and helpers

What you pay subcontractors is deductible, and so are wages, with the employer's share of CPP, EI and WorkSafeBC or WCB-Alberta premiums. The catch is proof. A payment to a helper with no invoice and no record of payment is hard to support, and in construction it also has to be reported. If more than half of your business income comes from construction and you paid a Canadian-resident subcontractor more than $500 in the year (not counting GST/HST), you file a T5018 slip for them. The return is due six months after the end of the reporting period you choose, either the calendar year or your fiscal year. If someone works for you as an employee as well, their wages go on a T4 and the subcontract work on a T5018.

Whether a helper is a subcontractor or an employee is a question of fact, not what the invoice says: who controls the work, whose tools are used, and whether the helper can make a profit or take a loss. If you're unsure, either of you can ask the CRA for a CPP/EI ruling. Our trades and construction page covers subcontractor reporting and clearance letters in more detail.

Records: an invoice from each subcontractor with their legal name, address, business number or SIN, and GST/HST number if they charge it, plus proof of payment. Collect the details before the first payment, not at year-end.

10. GST/HST input tax credits

If you're registered for GST/HST, you charge GST on your invoices and claim back the GST you paid on business purchases as input tax credits (ITCs): materials, fuel, tools and equipment, the business share of your truck's running costs, your phone plan, subcontractors who charge GST, and professional fees. ITCs are claimed only to the extent the purchase is for your commercial activities; nothing for personal use, and only the allowable 50% on meals. The GST you claim as an ITC is then taken out of the expense you deduct for income tax, so you don't claim it twice.

If you aren't registered because your taxable sales are $30,000 or less over four calendar quarters, there are no ITCs; the GST you pay is simply part of the cost you deduct. When to register, and whether registering early makes sense, is in our GST/HST registration guide. New registrants can claim ITCs on inventory and equipment they already have on the day they register, and a registrant on the quick method can't claim ITCs on operating costs but can on capital property such as a truck or equipment.

Records: receipts that meet the CRA's requirements for the size of the purchase: the supplier's name, the date and the amount for purchases under $100; also the GST amount or rate and the supplier's GST/HST registration number from $100 to $499.99; and your name, a description of what was bought and the terms of payment from $500 up. Most registrants have four years from the period the ITC could first have been claimed.

Also worth knowing

A few more that aren't deductions in the usual sense but are often missed: CPP on self-employment income, where you pay both halves (11.9% of net self-employment income between $3,500 and $74,600 for 2026, plus 8% CPP2 on income up to $85,000), and the employer half plus the enhanced part are deducted from income on line 22200 with the rest claimed as a credit; WorkSafeBC or WCB-Alberta premiums you pay for your workers, which are part of your payroll costs; interest and bank charges on business borrowing and business accounts; and advertising, from truck decals and site signs to your website.

This guide is general information for tradespeople and contractors in BC and Alberta, checked against the CRA's pages on 28 Oct 2026. Rules have exceptions and can change, and whether a cost is deductible depends on your facts; it isn't tax advice for your situation.