Tool Tax Legislation For Apprentice Technicians To Be Tabled This Fall

Legislation is to be tabled this fall which will provide apprentice technicians with a degree of tax relief against their tool purchases.
The move, confirmed by the Automotive Industries Association of Canada (AIA), says that The Minister of Finance and the Department of Finance will be working closely with AIA over the summer and will introduce legislation when the House resumes sitting in the fall.
According to Lise Newton, manager public relations at the association, "What we know right now is that will probably be tax relief over three years, which will work out to $1,500 total."
The expenditures that would be covered would be up to about 5% of gross income, or about $4,000 maximum.
While much detail still needs to be worked out, the association says that it has been assured by the Minister’s office and Liberal Caucus Members that tax relief for automotive apprentices technicians will be tabled this fall.

The following is a brief history of events leading up to this government relations victory:
1990- 2000 – Backgrounder
For at least a decade, AIA and a number of other automotive associations have been lobbying the government for deductibility of tools on income tax for automotive service technicians.
During the 1990’s AIA joined forces with the Canadian Automobile Dealers Association, the Canadian Automotive Repair and Service Council, the Association of International Automobile Manufacturers of Canada, the Canadian Vehicle Manufacturers Association, the Canadian Association of Motive Power Educators, and the National Automotive Trades Association of Canada. In 1997 a position paper on the deductibility of tools for automotive service technicians was prepared by the automotive coalition and sent to the Minister of Finance for his consideration. This issue became known as the tool tax issue.

September 2000 – House of Commons Standing Committee on Finance
On September 1, 2000, AIA submitted it’s brief to the House of Commons Standing Committee on Finance. Contained in the document under the second section, entitled targeted tax relief, was information on the impact of the high cost of tools, the impact of technology, and the shortages of skilled labour.

On September 12, 2000, AIA and CARS met with Maurizio Bevilacqua, MP, Chairman of the House of Commons Standing Committee on Finance to discuss the Tool Tax issue, and the status of C-205, a private members bill that called for the deduction of expenses incurred by a mechanic for tools required in employment. Mr. Bevilacqua was very supportive of the industry’s position and agreed to sponsor an Industry Parliamentary Reception on February 13, 2001.

February 2001 – Heart of the Industry Reception and Lobby Day
On February 13, AIA held its first Annual Industry Lobby Day on Parliament Hill. AIA’s Board of Directors met with 26 Members of Parliament, including the Minister of HRDC, the Honourable Jane Stewart, as well as senior ministerial staff. The purpose of the meetings were to brief Members of Parliament on the increasing shortages of skilled labour; the need to update Canada’s income tax laws to take into account the impact of the high cost of tools, and the impact of technology.

February 2001 – Strategic Meetings with Finance
On February 23, representatives from AIA met with Karl Littler, a senior tax advisor with the Honourable Paul Martin’s office, and discussed the need for AIA and government to work together to find solutions to the problems facing the skilled trades.
On February 24, AIA wrote to the Minister of Finance requesting that the government provide tax relief on the purchase of tools for young people who wish to become automotive service technicians. Following AIA’s letter, Karl Littler, Minister Martin’s senior tax advisor, met with the Department of Finance and AIA Canada to develop a plan of action.

February 2001 – Critical shortage of skilled automotive technicians
On February 28, the Honourable Jane Stewart, Minister of HRDC, publicly acknowledged that there was a shortage in all the skilled labour trades and in particular the automotive aftermarket. Other Ministers and Members of Parliament from both sides of the House of Commons also acknowledged the crises and began to work with Industry to find solutions.
Over the winter and early spring, AIA worked with Human Resource Development Canada (HRDC), the Department of Finance, and the Chairman of the House of Commons Standing Committee on Finance to assess the growing shortage of licensed automotive technicians in Canada and to develop a plan that would attract new prospects to the industry.