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Businesses . . . Taxes . . . Automobile . . .

GST implications

If the vehicle is owned by a corporation, and more than 50% of the usage is considered commercial activities, the corporation can claim an input tax credit (ITC) of 100% of the GST paid on your next GST reporting.

If you are an individual or partnership, the commercial activity must be 90% or more.

If not, the ITC is based on the capital cost allowance (CCA) claimed for income tax purposes.  CCA is calculated for at the end of the fiscal year.  After calculating the CCA, you calculate the ITC by multiplying the CCA by 7% (in Ontario).

Don’t forget, the Class 10.1 limit applies ($30,000 in 2005).

Links:

• Back to Automobile page

• Business use of your personal vehicle

• Types of expenses

• Personal use of a company owned vehicle

• Automobile log requirement

• Recent court cases

• Ask yourself ...

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Last modified: 06/28/06