How To Deduct Automobile Expenses
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- čas přidán 9. 09. 2024
- Have you been wondering if you can deduct automobile expenses? I get this question a lot!
The Canadian income tax act allows you to deduct any reasonable expenses incurred for the purpose of earning property or business income, subject to a bunch of exceptions.
Therefore, you are generally eligible to claim automobile expenses, However, the big question is, HOW?
In this video, I share what documents you need to keep to earn your deduction. We’ll also dive deeper into how to claim your deductions with practical examples and major pitfalls to avoid.
Key Moments In This Episode
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1:25 - How to earn your deduction in the eyes of CRA
2:20 - What are you eligible to deduct with an electric vehicle vs. a Regular vehicle?
4:43 - Formula to calculate deductible eligible leasing cost amount
5:24 - Claiming Capital Cost Allowance
6:51 - Leasing vs purchasing
9:45 - How and what to document in your auto log book (Examples)
13: 28 - How to determine your actual deduction amount with practical examples
17:28 - Common tax deduction questions answered
If you have any questions or thoughts after watching this video, leave a comment below, and I’ll respond as soon as possible.
Don’t forget to subscribe to my channel for more videos on Canadian real estate and tax-saving strategies, so you don’t miss a thing!
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Please make sure to speak to a professional that knows your personal situation before making a decision.
If you need to talk to someone on my team, send us an email at admin@cccpa.ca
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DISCLAIMER:
Real estate Tax planning is a personalized decision and will depend on your situation, priorities, and risk tolerance. Consult with your legal and tax advisors to ensure you get the best personalized advice.
The information contained in this video is for general information purposes only.
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#taxdeduction #taxwriteoff #deduction #tax #taxes #CRA #tesla #insurance #mileage #realestatetaxtips #cherrychanneltv
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Thank you for this video, it is very informative. I do have a question that you did not mention in this video. In my situation, I am incorporated, I am a home inspector in Calgary. I simply just had my corporation purchase the company vehicle outright, and I use it daily for work (going to inspections, etc). I do have to claim a small portion on my personal income tax for the benefit of driving the "company vehicle" for personal use. As I use the vehicles majority for work, It made more sense for me to not even own them personally.
I look forward to watching more of your new videos, and catching up on your previous videos. Thank you Cherry!
You make accounting simple to follow for the average person. Love your examples. Binge watching all your videos and liking and subscribed!
Thank you! I try to make it simple for an average Canadian.
Hi Cherry, I wanted to confirm at 16:40, when you mentioned that the total deductible would be $5850, this means that your total income is reduced by $5850 and your savings would then be based on your tax bracket. So if your income was $50K, you'd save 24% of $5850. If your income was $100K, you'd save 38% of $5850. (etc).
That is correct
Thank you Cherry. Your videos are so helpful.
I'm so glad!
Very interesting info.
I need to keep my receipts and car logbook. for my deductions. I missed a lot in the past!
Thank you for the video.
1. I do uber. For calcullating mileage to you count the "on delivery" or "online" mileage? Online mileage is higher as you also spend time driving around, when you don't have any order.
2. I track my uber milege from the first to the last order completed. Take a photo of the odometer at the begining of the first and last order. Is this sufficient or do you need address details of every delivery made? Has me thinking how to taxe drivers do it.
You would count the online mileage and if you can get a record of your trips that would serve as back up in a review situation.
Thanks, this helped me to get organized.
Excellent!
Thank you for wonderful informative videos for lay people to understand complex definitions on taxes
Glad it was helpful!
This was so helpful, thank you, Cherry :)))
Glad it was helpful!
BIG THANKS! I have one question please, I pay myself dividend from my corporation so I am not on a payroll can I still claim the car expenses or I MUST be employee under the payroll ?
Another super useful video!
Did you mention that only lease payments are eligible? What about payments on a car that is financed?
Finally, someone that explains things simply, thank you Cherry! I do have one question, I visit clients in their home and I saw somewhere online, while looking for answers that you could claim everything and take a percentage like you explained or you could use the simple calc, while saving all reciepts. Where would I go to find the cents per km for each of the years?
CRA posts the prescribed rate on their web site. I have posted the site address and there is the option to go looking for prior years rates at the bottom.
www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/benefits-allowances/automobile/automobile-motor-vehicle-allowances/reasonable-kilometre-allowance.html
I learnt so much from your videos. Thank you!!
Glad they are helpful
Does the EV vehicle have to be new to qualify for the $55k write off? I read something to the effect that each EV can only be written off once.
What are the implications if you deducted the 55k in the purchase year and sell the car after 2 years?
Hi Aura, this video will give you answer
czcams.com/video/89bHePnHJ48/video.html
Does the car have to be under your corporation or can it be under personal name for the capital cost allowance? Vehicle is owned
What if a business buys a used car from a private person for business use? and pays for it in cash? If the vehicle is $100K and taxes are 13K - can the corporation claim back the taxes? And CCA is still 30% per year until value is $0?
The CCA for automobiles over 30K would apply and it would considered Class 10.1 vs Class 10. You can schedule a meeting with my team to review these differences with you.
I'm self employed and work from home, but also have an office. Can I write off vehicle expenses for meeting clients at the office?
Amazing video. Thank you
Glad you liked it!
Thank you for this informative video, Cherry:) Can I switch from a Detailed Method to the Milage Allowance method at the beginning of a new fiscal year? I am in Canada, but I just saw this on the US Turbo Tax website: "If you want to use the standard mileage rate, you must choose it in the first year you use the car for business. In later years you can choose to use the standard mileage rate or switch to actual expenses".
I don't think there's a particular rule as how you choose it.. again, best to consult with your own personal accountant. If you do not have one, my team is happy to assist. Simply email us at our office and we can setup a consultation.
My car is bought by my personal account, not by my corporation ! Can I still claim the mileage?
What is the max you can charge for business use? 50%?
Very interesting info, thank you)
Glad it was helpful!
Also should the GAS be calculated as one portion (GAS with HST) or a portion of each ? what if I fix the car by my own I just pay the parts cost? how we should do it?
When you buy Parts: those are basically Expenses. Oil change.
So say you made 50K and your parts came up to 1K, you basically made 49K that year.
And all the GST you collected on all tools, jobs GOV wants that.
The gst on the gas you paid offsets the 5% GST you collected. So basically you spent 8K on fuel for work that year. 8k + 5% gst = 59$ basically that 59$ in gst you paid offsets the GST amount you collected. Ex:
Say you collected 1059$ GST from your jobs for the year, that one OIL change of 59$ you minus that from the 1059$ = 1000$.
All the gst you paid on tools expenses you claim that back and you wanna make what you owe to gov smaller for your benefit
Hello, when do you use this calc method vs the .70 cents for the first 5000kms and .64 cents for the remaining kms?
How do you split trips to the gas station and the mechanic? In your example of 10k km vs. 22k total year you’re short changing the deduction and this is more favorable to the government.
You said zero for license and registration in Ontario. What about your driver’s license?
Your log book is used to calculate the business use %.
Hi, is the t2200 form applicable to me if I’m a full time employee (not a contractor) and want to claim my travel expense to and from work? I was told otherwise by my employer and it does not seem to indicate anywhere on the form that I have to be a contractor to claim my travel to and back from work. Would appreciate this clarification please. Thanks
Hi i deliver for uber eats, and they provide an annual tax summary that includes the total km driven for deliveries with them. Would this document not be enough for the cra or am i still required to detail every dang delivery individually?
Thanks Cherry! I'm a slow learner so I had to rewind your video a bunch of times. But I finally got to the end and learned a lot!
Got some questions tho. I got this dashcam called Hivemapper and everytime I drive whether it's to my normal job, groceries, gym, etc.. my dashcam collects map data and in return I get paid in crypto. So at the end of the year, I'll sell this crypto and turn it into canadian dollars. Does this mean I get to deduct 100% of my Car expenses and I can skip the Auto logbook? I'll only have to record the odometer from when I started mapping? So while being employed, I can also be a Sole Proprietor business just by driving my car normally and deduct 100% of my car expenses..? Is these all technically possible?
Hi Cherry, thanks a lot for the detailed explanation. I've recently incorporated and using my personal vehicle for business purpose. Based on your video, my best way to calculate cost is to use the "Reasonable per-kilometre allowance" method. Question: As I pay the gas sometimes from my personal credit card and sometimes from my corp credit card, my bank accounts(personal vs corp) will be charged differently from my actual cost to be allocated at the end of the year. Do I need to transfer money in between my personal bank account and business bank account to reconcile those accounts?
In a perfect world, you stick to one form of payment for ease of tracking. Reconciliation should be done on a regular basis.
Hey Cherry, I recently started looking your videos and found quite informative. Thank You. I ve question after watching this video of we are eligible to do car expenses if we are doing job and are salaried? employees?
If you have T2200 from your employer you would be able to claim whatever it states on T2200. This also goes back to the nature of your job and what you do for a living. All the best.
What % of gas can I write off as a commission employee?
Is there any difference if you are buying a used car vs. new?
Great info. I have a few rentals under my name. Do I track mileage for each property, and report the prorated vehicle expense under each T776?
Yes and yes
Hi Cherry, I am a commission employee and my employer issues T2200 every year. I am planning to purchase Tesla and take advantage of 100% CCA in the first year. Thanks for your tips!
My question is, how long do need to keep the Tesla
until I sell it, so I don’t get any income recaptured?
Thank you!
czcams.com/video/89bHePnHJ48/video.html
You might find this video useful
Great video! Question. For the EV you cover the costs from public chargers, but what about home charger? I’m my case I mostly charge at home overnight. How do I claim that? Does the 45% from your example also apply to the hydro bills? Thanks again
I personally haven't figured out a way to deduct the overnight charges ...but I did have a discussion with someone who often charges at home as well, the cost of charge is so little in comparison.
Unless you have a dedicated meter for it, it would be difficult to prove that the charge was incurred for the car only.
Hi Cherry, amazing video! thank you. I am in a slightly different scenario with a personal car, company gas card and a weekly allowance of $127. Don't have many car expenses new winer tires if they count. I received my T2200 and not exactly sure what to do for taxes? Thanks in advance
You can deduct your expenses in T777 - assuming your T2200 says you need to use your personal vehicle for employment purpose. You'll need to include an allowance of $127 per week in your tax return as well... to offset against the expenses you have... sometimes you might not even have any net expenses being deducted given that the allowance you receive...
Hello,
I am personally incorporated and my company is my home. I am currently under contract with a company which I must go on-site to work to. Is this situation deductible on gas?
What if I buy a box truck. Can I also have millage allowance since it’s for gaining a business income ?
If you buy a truck, depending on the type of truck and whether it is classified as passenger vehicle, you might have a chance to have a higher write off - and may be beneficial to own it directly in a corporation for the bigger write off.
Again, this goes back to your particular business and the type of truck you are referring to, best to consult with an experienced CPA that understands your situation.
Thank you for this detailed video. I'm curious to know if I purchase an EV under my corporation, can I take advantage of the federal and provincial EV rebate if I utilize the standard 30% CCA deduction as supposed to the 55k enhanced CCA?
I have been told that you can opt for the program that better suits your situation.
Yes of course. You can take advantage of the EV rebate. And CCA deduction has now gone up to $34K as well.
If you take the EV rebate, you automatically cannot qualify for $55K enhanced CCA regardless.
Thanks Cherry! Your videos are always helpful. One thing I noticed on the CRA website is that the leasing allowance tool is not updated with 2022 new CCA limit of 34000 or 900$ lease limit due to inflation. Am I correct in my understanding? I will be leasing a new vehicle in December and I assume my calculations will be based on the new CCA limit of 34k? Thanks again.
Yes it should be based on the new CCA limit of $34K and maximum lease payment of $900 for 2022.
Can I claim car parts? Like oil and oil filter and new tires?
I’m employed and self-employed and I use my car for both of them. I’m keeping a log that keeps my mileage separate.
Instead of getting my oil change or getting my tires change can I claim the materials I needed to use?
Parts are part of car maintenance and therefore can be tax deductible provided that you use your car for qualified employment use or business use.
Hello Cherry. I don’t run a business, but beside my regular job I have a rental property 300km away from my home where I occasionally drive to do maintenance or the bi annual inspection . Can I deduct same ( some) car expenses presented in your video?
Thank you
On CRA's website, they did mention that if you have one property that is in the general area that you live in (but they didn't define what general area means), you are eligible to claim the mileage you incur to do maintenance on your own and do annual inspection.
@@RealEstateTaxTips What about the bi-weekly payments on the vehicle?
Hi Cherry, you mentioned driving to your office doesn't count as a tax deduction. Let's say I am a realtor and using my home as an office. Is driving back to the home after visiting a client tax deductible on mileage?
The capital gain is added to your reported income and taxed at the marginal tax rate that the income falls into
Also curious if you did have multiple businesses, and make a trip to let’s say the hardware store, but purchase things for more than one business at that one store/trip?
You can prorate it to the two different businesses, but can't claim for both.
@@RealEstateTaxTips just to clarify: meaning, claim part of it for each business? (Can’t claim all of it for both)
Hi Cherry, great video! One question, I have my corporation and run my business from home, I do almost no client visits, so really most of my car expenses are personal, would it be ok to buy the car through the corporation and do not claim any expense? The idea behind it would be to basically save on personal taxes of taking the money out of the corp and buying the car. Thanks!
You can, but this also trigger something called Standby charge and shareholder benefits
Hi Cherry, for the $3,000 of gas in your example, that takes into account both business and personal gas expenses for the year correct? Up to this point I have only been saving my business related gas receipts.
Yes it is a combination of everything. As the expenses are deducted based on the mileage. Plus it's difficult to determine the tank of gas that are specific to personal vs. business.
What if your monthly lease payment is more than the deductible allowance of $900?
Does CRA not want higher lease payments or are they okay with it but they will only cover/tax deduct the first $900?
The actual amount of deduction is really based on the car value - as mentioned the video there's a complicated formula that CRA use to calculate the amount you can deduct as monthly lease payment.
Even if your monthly lease is less than $900, you might just be able to claim a fraction of it based on the formula.
If you have anything over $900, it's grinded down based on the formula as well.
Hi,
Need an appointment to discuss real estate taxes ( rental properties) and deductions. Do you steel taking new clients for tax filing?
Hi, please reach out to my team at realestatetaxtips.ca/contact-us/ and we can walk through the next steps. Thanks
Do you need a log book if you have an app which records trips?
Your app serves as the log book
Hi,
Thanks for the informative video.
I am working as a temporary employee but full time.
My job nature is field work (out of office) and requires a lot of travel.
I am using my own vehicle for my work. On an average, my travel km goes upto 1500 kilometres per week.
My employer pays me 0.46 cents/kilometre.
Am I eligible for any tax deductions?
Moreover, I asked my employer to provide T2200 form but they said me to fill it myself and they will approve/sign it.
What are the options for me?
I will be very thankful for your help.
In order to claim your vehicle expense you will need the T2200, signed by your employer, you will also need to offset your expense by the amount you have received as a reimbursement.
Hello cherry where is your office located ? Thanks
I have a couple rental properties already…I am building a brand new airbnb building on a vacant lot, am I allowed to claim mileage travelling to go work on the construction of the airbnb cottage? Or is that cost incorporated into the UCC of the building?
The mileage would be considered a "Soft Cost" and be included in the UCC of the building.
@@RealEstateTaxTips I thought so. Thanks so much!
In Canada, to deduct car expenses as self employed, it seems that we cannot just use the CRA allowable mileage rate multiple by the total of business kilometers, is that correct? I do not see a way to calculate car expenses like that in the tax form T2125.
You're correct, the form does not allow it. I always suggest my client to keep all receipts when they're self employed.
How would you calculate charging an electric or hybrid vehicle at home, (since there’s no receipt for that, it’s just part of your hydro bill)?
I think it would be challenging when you charge it at home...
@@RealEstateTaxTips challenging, yes for sure. But should still be valid somehow, since it’s the equivalent of fuel. Just not sure how to go about trying to calculate such a thing.
@@echoezra I toyed with the idea that you take your average of your current year bill less tha amount you paid for your last year's hydro cost... but again, this is only in my head I doubt it would stand in court.
Another option though is if you were to have your panel upgraded to a 200 panel, instead of having an upgraded panel for 200, you have a separate meter dedicated just for your charge.
Good video, thanks Cherry. I just started my business in a corporation and I use a personal vehicle for business use. I am only collecting a dividend in the first year, not a salary. Am I still able get reimbursed by the corp for the use of personal car? I just found out the car allowance is only for an owner/employee who receives a salary. Could you please advise if there is a way around it or I have to receive a salary to get reimbursed? Thanks!
Many of our clients are still using the mileage allowance to claim their business use of their personal vehicle. A lot of them also keep a log book and claim the expenses in personal name.
@@RealEstateTaxTips Thank you for the reply. CRA states the mileage allowance requires the person to be employed and receive a salary. In a case where the owner does not take a salary (i.e. dividend), the allowance would not be allowed. How do you claim expenses in the personal name when you are not on a salary?
Hi Cherry, if you buy a used car for business, can you still use CCA?
Absolutely
Cherry you are fine 😉😉. Can you be my tax accountant for my properties ? 😉😉