David Sklar & Associates Inc.

Consumer Proposal & Bankruptcy Trustees
Serving the Greater Toronto Area

Ontario Bankruptcy -Tools of Trade - FAQ

Under the Ontario Execution Act – which stipulates which assets are exempt from a bankruptcy settlement in the province of Ontario, there is a category of exempt assets commonly called Tools of Trade.

The goal of these exemptions is to enable bankrupts to continue to earn their livelihood.

According to the Act, Tools of Trade (other than farming tools), are “tools and instruments and other chattels ordinarily used by the debtor in the debtor’s business, profession or calling not exceeding the prescribed amount...” The prescribed amount was changed to $11,300 under the Execution Act in 2005.

Every situation is unique, and any questions you have about your Tools of Trade should be addressed directly to your Trustee.

FAQs on Ontario Tools of Trade in Bankruptcy:

What are some examples of typical Tools of Trade:

• Paint, Brushes, and Ladders for Professional Painters


• Adjustable Chairs, Industrial Hairdryers and Professional Basins for Hair Stylists


• Portable Massage Table, Massage Chair and Towels for Massage Therapists


• Portable Tile/Mable Cutters, Power Tools and Drills for General Contractors

What are some examples of types of Tools of Trade that most people would not normally think of:

• Vehicles – where a vehicle is an essential element of the trade – this is in addition to the one vehicle per household/bankrupt exempted in the Act


• Inventory/Supplies – items use in the creation and providing of products/services

In general, how is the value of the tools determined?

• The value of exempt Tools of Trade is determined by a licensed Appraiser/Liquidator. For example, if it were a vehicle - it would be appraised by an authorized dealership, or a licensed Appraiser /Liquidator, or with a Motor Vehicle Appraisal from the Ministry.

What happens if the tools of trade are valued at more than $11,300?

• Generally, if the value of the tools exceeds the exemption limit, the individual will have to pay the overage to his bankruptcy estate for the benefit of his/her creditors.

Does it matter if the tools are used as more than tools of the trade (ie an income-generating web designer's computer that is also used as the household computer)?

• Normally, it will not matter as long as the tool is used fairly regularly as an aspect of the occupation. However, it should not be something that is of more benefit personally than professionally.

Can a bankrupt claim Tools of Trade if the tools have never generated income (ie - a bankrupt with woodworking tools that he hopes to use 'someday' to generate income)?

• If tools have not been used to generate income - they cannot be considered as exempt Tools of Trade for a bankruptcy.

Additional Considerations: The bankrupt should ensure that the ‘tools’ are properly registered and insured. In addition, if a tool is being financed with a secured loan, or a secured leasing agreement, the individual should also ensure the payments are current and up to date. If Tools of Trade have been used as security in a loan or leasing agreement, they cannot be part of a bankruptcy and are not protected by bankruptcy exemptions.

Each situation is unique, and you must check with your Trustee regarding any items that might be classed as Tools of Trade.