If you use a vehicle for work, or are considering purchasing a vehicle for work, a number of great tax deductions are available to you. The CRA keeps a close eye on individuals that claim these deductions to make sure you qualify for them and only deduct approved expenses. Contact your accountant if you have any questions so that you can avoid over claiming and an audit.
The Canadian Government has four required conditions that you must meet in order to be authorized for automobile deductions. If you’re not sure you qualify check out their website or talk to your accountant.
- You must normally work away from your place of business or employment
- You must pay your own vehicle expenses and not receive any allowances or reimbursement for them
- You must not receive a non-taxable allowance for automobile expenses
- You must keep a cope of Form T2200 along with all other records
If you meet all of these conditions the next step is determining which expenses can be deducted. A big thing to keep in mind is that only the percentage of expenses related to earning business income can be deducted. So the drive to and from your place of work is considered personal use and therefore not deductible. Below are all of the costs the CRA and Canadian Government allows you to deduce as vehicle expenses:
- Fuel
- Maintenance and repairs
- Insurance
- Licensing and registration fees
- Capital cost allowance
- Eligible interest
- Eligible leasing costs
Always talk to your Toronto Chartered Accountant when you start claiming these tax deductions to make sure you’re doing so accurately. The CRA watches these claims closely so your accountant is vital in keeping an audit away from you.
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