Q&A Part 5/5 Keeping Records:Vehicles for self-employed

Q: If you purchase a passenger vehicle for $45,000 can you use class 10 rather than class 10.1?  This would allow you to claim CCA in year 1 at 15% on $45,000 + taxes rather than 15% on $30,000 + taxes.

A: Passenger vehicles are considered Class 10.1 if they are over the threshold, which is currently $30,000 plus the taxes on $30,000. A Passenger vehicle is a sub-set of motor vehicles that are specifically exempted from Class 10 if they are over the threshold. Motor Vehicles are Class 10, no matter what price. So, if you want to write something off as Class 10, it's necessary to own and use for the correct % the correct type of vehicle, a motor vehicle. See the CRA vehicle type chart for type and use% requirements

Q: Since the 'bus use in the year bought' is key in determining the type of vehicle, does that extend to the first year CCA is being claimed by the business?  eg.  Sole prop has owned vehicle for many years, but has not claimed CCA in prior years, but wants to start now.
A: The year you put a personal asset into use for the business, that is the year you would acquire the vehicle from yourself at fair market value. See the T4002 guide for more information.

Q: Auto accessories: floor mats, chrome bumpers, leather seat covers...these aren't considered part of allowable expenses, correct?
A: Correct, those are not maintenance and repairs, unless you are replacing something that was damaged
Q: Should vehicles that are <90% business use be shown on the sole prop/partnership books?
A: I record all the assets used by the business in the books in order to account for it's use, and ITC on CCA claims, so I can reconcile to the taxes each year.  In the workshop I showed a spreadsheet where I've reconciled the assets held on the books with the UCC for tax purposes, which may highlight where there are timing or permanent differences between what's recorded for accounting and what's recorded for tax purposes.

Q: Thank you so much for a Herculean effort, Eileen.  Would you consider moving vehicles into its own webinar and simply referring records-keeping attendants to it (as per other available webinars on your site)?  Having isolated and appended it has worked well and the amount of need-to-know stuff lends itself very well to a complete stand-alone topic.
A: Thank you for the lovely compliment. It was a lot of work to put this workshop together. It isn't the first time I've addressed this topic and it won't be the last. The web page in my TaxLinks Pro Portal is an ongoing effort.

As for how the videos are sold, I've done that in a way. If you look at the shopping cart, it's possible to purchase the videos individually or as a set.

Check out my shopping cart under Keeping Records. IPBC members will find that I'm switching to a new system. I'll be providing a promo code and you'll purchase at the main shopping cart on my website with your promo code. I'll be phasing out the old system, probably after tax season. It was getting way to expensive to have double the number of items, given that there are over 50 items for sale on my website, plus bundles, etc.

www.taxdetective.ca/ecommerce.html

http://www.taxdetective.ca/keeping_records_business.html