Important Reminders on your Motor Vehicle Expenses, Part 2

by in Tax Advice Information and Updates
Important Reminders on your Motor Vehicle Expenses, Part 2
As we mentioned in part 1 of our blogs series on Motor Vehicle Expenses, the CRA may soon be randomly targeting business owners who have claimed their motor vehicle expenses in previous tax years. To be able to prepare you for a possible tax review or audit in relation to your claimed vehicle expenses, here are more important things you will need to remember to ensure a smooth and quick review / audit process:

1. If you use more than one motor vehicle for your business, keep a separate record for each vehicle that shows the total and business kilometers you drive, the cost to run and maintain each vehicle. You also have to calculate each vehicle’s expenses separately.
2. If you use a motor vehicle for business and personal use, you can only deduct the part of the expenses that you paid to earn income. You can, however, deduct the full amount of parking fees related to your business activities and the supplementary business insurance for your vehicle.
3. If you are a partner in a business partnership and incur motor vehicle expenses for the business by using your personal vehicle, you can claim those business related expenses on “Line 9943 – Other amounts deductible from your share of net partnership income (loss) of Form T2042.
4. You can claim the following types of expenses: license and registration fees, fuel and oil costs, insurance, interest on money borrowed to buy a motor vehicle, maintenance and repairs and leasing costs.
5. An employee may use his or her personal vehicles to carry out his or her employment duties and get an allowance for the business use of that vehicle. Reasonable allowance rates for 2018 are as follows: 55 cents per kilometer for the first 5,000 kilometers driven and 49 cents per kilometer driven after that. In most cases shareholders and directors of corporations are also employees of their companies and can receive reimbursements for use of a vehicle.

Remember, doing things properly especially when keeping records for your motor vehicles is extremely important. As with any other expense you claim, you have to be able to support your expense claims with accurate and complete records. This will ensure that, should you be selected for a review or audit, the process will go smoothly and will not cause too much stress on you and your accountant.

Lastly, please do not forget to contact KD if you need help in this area. We are here to help you!

Source: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/business-expenses/motor-vehicle-expenses.html
Rate this blog entry:
0
KD PROFESSIONAL is a group of interconnected companies offering a wide range of financial, accounting and tax services to individuals and businesses across Canada.

Through our experienced staff and strategic alliances, we provide exemplary service and solutions to maximize your cash flow, while preserving Wealth.

Comments

  • No comments made yet. Be the first to submit a comment

Leave your comment

Guest
Guest Saturday, 22 September 2018
Subscribe

If you have a question about one of our products or services, please do not hesitate to contact us!
Please Enter Your Name
Please Enter A Valid Email
Please Enter Your Phone Number
Please select your preferred method of contact.
Refresh Please letters shown!

KD Professional Services
Monday-Friday 9am- 5pm
102, 221 18th Street SE
Calgary, AB, T2E 6J5

403-219-0602
403-219-0603

Read our Tweets