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Businesses . . . Taxes . . . Automobile . . .Types of expenses:There are two types of auto expenses that can be claimed: fixed and operating. The fixed expenses are subject to deductibility restrictions if you drive a passenger vehicle, which is placed in Class 10.1 for CCA purposes. Other vehicles (including those known as motor vehicles and autos which are not passenger vehicles) are placed in Class 10 for CCA purposes. Fixed Expenses Fixed expenses include (subject to restrictions on Class 10.1 passenger vehicles):
Operating Expenses Operating expenses include:
Example 1: Jane is a commission salesperson in the financial services industry. She uses her personal vehicle for a total of 15,000 km in the year and puts a grand total of 30,000 km on her car for the same period. Her carefully kept records show that she has lease expenses of $500 per month for 12 months, and operating costs of $4,000. What is her allowable deduction for auto expenses in the year? Answer: (15,000 / 30,000) * (6,000 + 4,000) = $5,000
Example 2: George uses his $60,000 BMW car in his financial services business. He uses his car (according to his mileage log) for 25% of his total usage in the year. What is the CCA claim he can include in his deductible auto expenses in the year? (assume he pays 8% provincial sales tax, and 7% GST) Answer: $34,500 *30% * 25% usage = $2,587.50 Don’t forget, on passenger vehicles, only $30,000 plus taxes can be used as the base for CCA. If this is the first year the car was in use then the CCA claim is reduced to $1,293.75 (50%).
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