To help automotive service apprentices take full advantage of the tool tax deductions introduced for the income tax year 2003, AIA has prepared information for automotive service apprentices to help them receive their tax deduction.
AIA has prepared the attached schedules by province based on the 2003 tax rates, as they currently exist. AIA used the salary levels of $20,000 and $30,000 for the examples. For calculation purposes, single or married does not relate to an individual's marital status, but rather, are they entitled to a deduction for a spouse/significant other who does not work outside the home.
At the present time, both of these amounts fall within the lowest tax bracket as outlined by Revenue Canada. The second tax bracket does not begin (in 2003) until taxable income has reached $32,183. There are opportunities when incomes rise above this amount, to use the tools to keep taxable income below the threshold.
You must be registered in a recognized government program.
All tools purchased in a tax return year will be eligible, less a deduction of the greater of $1,000 and 5% of an individual's apprenticeship income for the year. Tax relief benefits start to show up on net claims totaling $3,000 or more.
The apprentice's employer will need to certify that the tools are required as a condition of, and for use in, the apprenticeship.
If you do not claim the maximum deduction, you can carry forward the unused portion for use in future years.
Please Note: This "How-To" Guide deals with a number of complex issues in a concise manner, although every reasonable effort has been made to ensure the accuracy of the information, AIA will not be liable for its contents. It is recommended that apprentices seek appropriate accounting or other professional advice before acting upon any of the information contained in this document.
