# Self employed House painter with lots of questions.



## wildbill7145 (Mar 22, 2018)

Hello! So, I'm a self employed house painter and I've been doing my own income taxes for many years now. At one point years ago, I took the training course offered by CRA to do income taxes for low income individuals so I've got some background in this stuff.

One problem I seem to come across every year while doing my income taxes is where to put certain business expenses. It almost seems like they're trying to confuse you by changing what line it goes on every year. Either that, or I'm just getting old and stupid.

Tools for example. Ladders, hammers, tool boxes, etc. Stuff you take home with you that lasts for longer than one job.

Consumables. Caulking, drywall mud, sandpaper, etc. Stuff you use on multiple jobs that eventually gets used up and repurchased.

Any advice regarding these two topics would be greatly appreciated.

I did try and do a search for this information to see if it had been asked before, but as usual the Vbulletin search feature isn't exactly intuitive.


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## Mukhang pera (Feb 26, 2016)

Others here will, no doubt, have more direct experience.

It seems to me that the various items you describe would get capitalized and depreciated over time, or written off in year of acquisition as expenses. I would doubt that the CRA would expect to you keep track of a $100 ladder, for eg., and write it down over a period of years. I would say expense the whole lot.


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## wildbill7145 (Mar 22, 2018)

Thanks for the reply. I seem to remember the limit is $200. Any tool costing more than that has to be depreciated over time. I do have a ladder I purchased last year that was $244, so I'm going to have to look into that for that one. I just remember going insane last year trying to find the line # I entered that information into. It wasn't the same as the year previous and I couldn't find out what they changed it to. Most of the actual tools I buy are generally under the $200 threshold, so in the past I've just been writing them off in full in the year purchased as you suggest.

This year, I've purchased a paint sprayer worth $2000, so I'm definitely going to have to figure out the depreciation thing for next years taxes.


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## OptsyEagle (Nov 29, 2009)

The rule of thumb I use and it may have come from the tax act, I can't remember, is for each expense ask yourself this question: "Does the item still have value at the end of the year?". If the answer is yes, then it should be capitalized and depreciated based on the schedule you will find in the income tax guide. If the answer is no, then it should be expensed.

For example a hammer can still be used next year. That would be a capital expense. A nail's value is over, once it is hammered into the wood. Therefore nails would be a regular expense item.

One last point. When in doubt you should expense it. That is because an expense will have a much higher immediate tax benefit then something that is depreciated over 10 or 20 years. For example, a paint brush might have some value at the end of the year, if you clean it properly, but let's face it, it's life is not that long and I would probably expense those items.


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## Eder (Feb 16, 2011)

A painter should buy 10 $200 airless sprayers rather than 1 for 2k...nudge nudge say no more.


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## OptsyEagle (Nov 29, 2009)

Eder said:


> A painter should buy 10 $200 airless sprayers rather than 1 for 2k...nudge nudge say no more.


Except for the fact that I don't remember ever seeing any $200 limit rule. I don't believe that it exists, unless it is something very new.


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## Eder (Feb 16, 2011)

I don't either, but avoiding capital costs is a good strategy for small business.


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## wildbill7145 (Mar 22, 2018)

Just doing some research on the CRA website, I think the limit has increased to $500. Class 8 of depreciable property. I can't post a link as my post count isn't high enough.


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## OhGreatGuru (May 24, 2009)

See https://www.canada.ca/en/revenue-ag...professional-income-2016/t4002-5.html#tocch3a

_Line 9820 – Small tools

If a tool costs you less than $500, you can deduct its full cost. If it costs you $500 or more, add the cost to your CCA schedule as Class 8 property.

Small tools that cost less than $500 are fully deductible in the year of purchase. You may claim them as an expense at line 9820 or claim CCA by including them in Class 12 (with a CCA rate of 100%). Either method is acceptable, but do not claim the amount twice. For more information on CCA, see Chapter 4._

See Chapter 4 https://www.canada.ca/en/revenue-ag...usiness-professional-income-2016/t4002-6.html for info on CCA.

Somewhere there is a long schedule of the CCA rate for different kinds of equipment. Try this page: https://www.canada.ca/en/revenue-ag...t-allowance/classes-depreciable-property.html. I think your paint sprayer would be Class 8 (20%), but don't quote me on it.

But if the cost of a tool is under $500, it doesn't matter if a tool lasts you 20 years - it can be written off in the year of purchase.


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## OptsyEagle (Nov 29, 2009)

If the cost of a tool is under $500, they want you to depreciate it as a "class 12" and over $500 a class 8. Now class 12 allows for a 100% depreciation, but that does not make it an expense. It is still a depreciation. The difference is that an expense would allow for 100% deduction in the year it is purchased. When depreciated you can only deduct 100% of "half of the value" in the first year and then you can deduct 100% of the remaining value in the next year. Basically it means that you would deduct 1/2 in the 1st year and the remaining 1/2 in the 2nd year...for tools less then $500. 

For most other capital expenditures they don't tend to limit the purchase value. I never bought tools for my businesses so I never came across that specific item.


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## joah (Mar 26, 2018)

What about if a painter say had several small tools totalling over $500? say $2000? Would these be class 8 or class 12? thx


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## OptsyEagle (Nov 29, 2009)

They would be class 12 in my books for two reasons. 

1) they are separate items and I think they should be classified separately and 2) if there is any grey area I deduct according to what makes me pay less tax in a given year and class 12 gives a larger deduction then class 8 and therefore class 12 has me paying less tax.


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## wildbill7145 (Mar 22, 2018)

Thanks for the replies folks. Much appreciated.


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