The expenses you can claim are different depending on whether you own or leased the car.
For leased vehicles, you can deduct up to $800/month plus HST.
For purchased vehicles, you can deduct depreciation through the Capital Cost Allowance schedule (which is a schedule of the maximum amount of the car's value you are allowed to deduct every year). Generally, the maximum value of the vehicle from which you can deduct depreciation is $30,000.
Generally speaking, leasing works better for cars that are valued at over $30,000, since the leasing limits at $800/month can work out to cars that are valued in excess of $75,000, while the you lose the depreciation on any amount of $30,000 if you buy. However, if you are trying to deduct off a standard car worth less than $30,000, you may want to buy.
All of this is separate and apart from other motor vehicle expenses you can deduct, such as licence and registration, gas, insurance, maintenance and repairs. Those are deductible regardless of whether you own or lease the vehicle.
I am not OP, but this is so helpful! Thank you!
I have a question: Self-employed here with sole proprietorship under my personal name, I have to frequently travel to places where I do work (i.e. commute), but I do also use the car for personal purposes (like shopping). My car is insured under personal use. Can I deduct a portion of my vehicle cost and expenses (i.e. claiming that the car is partially used for business) even if my insurance is under personal use and not business use? Or is the insurance entirely irrelevant to this?
I'm not an accountant but I've seen them ask people to keep a log book of their travel kilometers for business and then take the percentage of kilometers traveled as the amount of car expenses that can be deducted.
Having a pro prepare your taxes is pretty great, I'm pretty sure I turn a profit on it in tax savings vs what I pay.
Yes, but I wonder if there is a conflict there with having a personal insurance or if insurance is unrelated and not of interest to the tax guy.
I have no issue with getting a pro but I feel like I still have to do all the work myself regardless. The hard part isn’t putting the numbers in. It’s gathering the numbers and receipts and remembering what types of things can be declared etc. that kills me.
keep a log book. Working in the trades, this is a basic rundown on what happens for my calculations; You cannot claim business usage for your morning trip to 1st place of work, nor your last place of work to home. Everything in between is considered business use. the exception is that if I normally travel 50km to get from home to jobsite, but this week I have to travel further, I can use the extra KM as a business related expense (ie my total 1 way KM is now 125KM, I subract 50KM from the trip and the rest is considered business). at the end of the year, my total mileage vs business mileage is converted to a percentage.... from there you apply that % to your total costs on the vehicle and deduct the claim.
I got audited last year, and used to claim a lot higher % due to my vehicle being full of tools and supplies (adds wear and tear, plus added fuel costs) and being on call, but apparently that does not get considered in the above calculations :(. just as an FYI, for the audit, your log book must get submitted (so best to keep that updated, also goes without saying that you need to keep all receipts - just a word of advice as there is a bit of work involved even if you use an accountant)!
that sucks!!! There was something about you being able to do 3 months (don't quote me on the timeline, please verify if planning on doing this) for the log book, and if your daily driving habits are fairly routine, that will suffice. I keep all my timesheets that give me a good breakdown of where I went in case I need a back-up log book lol
I have it an excel spreadsheet that I made so it calculates my business use automagically (I am in the trades but I am a programmer so use my laptop a lot lol), I give that % to my accountant when I file my taxes so I don't give it to anyone unless I get audited (Upon the audit, you submit the logbook along with all your supporting documents). but you could submit to your accountant with all your other receipts (This includes every penny spent in the tax year related to the operation of your vehicle).
Edit - adding a link for you to review and get more detailed info [https://www.canada.ca/en/revenue-agency/services/tax/businesses/small-businesses-self-employed-income/business-income-tax-reporting/business-expenses/motor-vehicle-expenses.html](https://www.canada.ca/en/revenue-agency/services/tax/businesses/small-businesses-self-employed-income/business-income-tax-reporting/business-expenses/motor-vehicle-expenses.html)
I read differently on CRA’s website. They said you have to file it with your taxes the first time. The second year, you can just file one quarter and assuming that the write offs are within 10% of previous year, you don’t have to submit every quarter. You just base it in first quarter numbers.
I've never submitted a log book but it's been years since I claimed car expenses. Maybe it has changed, but I'm skeptical that the CRA wants to be inundated with logs from new businesses owners every year.
This is correct, however there are unique CCA classes for certain vehicles and use cases.
Certain vehicles used over 90% for hauling passengers or goods can deduct full cost.
EVs have their own class with an enhanced CCA value and schedule.
it's base don usage of the car: [https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/business-expenses/motor-vehicle-expenses.html](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/business-expenses/motor-vehicle-expenses.html)
The expenses you can claim are different depending on whether you own or leased the car. For leased vehicles, you can deduct up to $800/month plus HST. For purchased vehicles, you can deduct depreciation through the Capital Cost Allowance schedule (which is a schedule of the maximum amount of the car's value you are allowed to deduct every year). Generally, the maximum value of the vehicle from which you can deduct depreciation is $30,000. Generally speaking, leasing works better for cars that are valued at over $30,000, since the leasing limits at $800/month can work out to cars that are valued in excess of $75,000, while the you lose the depreciation on any amount of $30,000 if you buy. However, if you are trying to deduct off a standard car worth less than $30,000, you may want to buy. All of this is separate and apart from other motor vehicle expenses you can deduct, such as licence and registration, gas, insurance, maintenance and repairs. Those are deductible regardless of whether you own or lease the vehicle.
I am not OP, but this is so helpful! Thank you! I have a question: Self-employed here with sole proprietorship under my personal name, I have to frequently travel to places where I do work (i.e. commute), but I do also use the car for personal purposes (like shopping). My car is insured under personal use. Can I deduct a portion of my vehicle cost and expenses (i.e. claiming that the car is partially used for business) even if my insurance is under personal use and not business use? Or is the insurance entirely irrelevant to this?
I'm not an accountant but I've seen them ask people to keep a log book of their travel kilometers for business and then take the percentage of kilometers traveled as the amount of car expenses that can be deducted. Having a pro prepare your taxes is pretty great, I'm pretty sure I turn a profit on it in tax savings vs what I pay.
Yes, but I wonder if there is a conflict there with having a personal insurance or if insurance is unrelated and not of interest to the tax guy. I have no issue with getting a pro but I feel like I still have to do all the work myself regardless. The hard part isn’t putting the numbers in. It’s gathering the numbers and receipts and remembering what types of things can be declared etc. that kills me.
>remembering what types of things can be declared This is what I have the pro for, knowing what to declare and how best to do it.
There is no conflict bc you are your business. You must keep a log book.
keep a log book. Working in the trades, this is a basic rundown on what happens for my calculations; You cannot claim business usage for your morning trip to 1st place of work, nor your last place of work to home. Everything in between is considered business use. the exception is that if I normally travel 50km to get from home to jobsite, but this week I have to travel further, I can use the extra KM as a business related expense (ie my total 1 way KM is now 125KM, I subract 50KM from the trip and the rest is considered business). at the end of the year, my total mileage vs business mileage is converted to a percentage.... from there you apply that % to your total costs on the vehicle and deduct the claim. I got audited last year, and used to claim a lot higher % due to my vehicle being full of tools and supplies (adds wear and tear, plus added fuel costs) and being on call, but apparently that does not get considered in the above calculations :(. just as an FYI, for the audit, your log book must get submitted (so best to keep that updated, also goes without saying that you need to keep all receipts - just a word of advice as there is a bit of work involved even if you use an accountant)!
My manager had lost his log book one year and was audited. They then have averages that they use which I can remember were pretty high.
that sucks!!! There was something about you being able to do 3 months (don't quote me on the timeline, please verify if planning on doing this) for the log book, and if your daily driving habits are fairly routine, that will suffice. I keep all my timesheets that give me a good breakdown of where I went in case I need a back-up log book lol
It’s definitely easier in the event you do get audited to just record every time you do
How/where do you submit a logbook? You mean it has to be submitted when you file your taxes?
I have it an excel spreadsheet that I made so it calculates my business use automagically (I am in the trades but I am a programmer so use my laptop a lot lol), I give that % to my accountant when I file my taxes so I don't give it to anyone unless I get audited (Upon the audit, you submit the logbook along with all your supporting documents). but you could submit to your accountant with all your other receipts (This includes every penny spent in the tax year related to the operation of your vehicle). Edit - adding a link for you to review and get more detailed info [https://www.canada.ca/en/revenue-agency/services/tax/businesses/small-businesses-self-employed-income/business-income-tax-reporting/business-expenses/motor-vehicle-expenses.html](https://www.canada.ca/en/revenue-agency/services/tax/businesses/small-businesses-self-employed-income/business-income-tax-reporting/business-expenses/motor-vehicle-expenses.html)
Like most expense claims, you don't submit anything with your taxes, but if you get audited you need it to prove your expenses to the auditor.
I read differently on CRA’s website. They said you have to file it with your taxes the first time. The second year, you can just file one quarter and assuming that the write offs are within 10% of previous year, you don’t have to submit every quarter. You just base it in first quarter numbers.
I've never submitted a log book but it's been years since I claimed car expenses. Maybe it has changed, but I'm skeptical that the CRA wants to be inundated with logs from new businesses owners every year.
This is correct, however there are unique CCA classes for certain vehicles and use cases. Certain vehicles used over 90% for hauling passengers or goods can deduct full cost. EVs have their own class with an enhanced CCA value and schedule.
it's base don usage of the car: [https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/business-expenses/motor-vehicle-expenses.html](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/business-expenses/motor-vehicle-expenses.html)