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jesterme2007
03-13-2016, 08:52 AM
Question as I'm getting different answers ....

I own a small mobile service based company that is incorporated. I have a personal car ( Civic ) that I use strictly for the business I drive about 4000kms a mth I have GPS tracking system that logs all my trips.

My new bookkeeper thinks I should sell the car to the business as it will have more benefits with expenses and save me money ..no maintenances cost, no fuel cost, no insurance cost, and Depreciation of the car.

I on the other hand thought that I can collect a non taxable reasonable CRA listed KM rate. She says that the KM is still taxed and is added on as income.

Any advice on this situation ?

Also any recommendations on affordable small business accountants and bookkeepers?

http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/bnfts/tmbl/llwnc/nntx-eng.html

thx

rx7_turbo2
03-13-2016, 09:13 AM
Not sure the answer to your question, however my accountant advised me of the same thing and I took his advice years ago, always had a dedicated company owned vehicle. I did all my own book keeping with quickbooks.

revelations
03-13-2016, 11:48 AM
I was under the impression that its a factor based on 1) business income and 2) vehicle useage .... in some cases it makes sense and in others not.

I should ask my accountant this as well, but my understanding is that you need to be making a fair amount + raking up miles before its viable.

Rarasaurus
03-13-2016, 01:14 PM
If you run a cheap vehicle you are better taking the per km fee and it is easier to do since you don't have to keep all records, just km. If the car is more expensive, depreciates a lot and has high maintenance fees it is probably better for the company to pay for that in full.

In your case I would take the $2g in km fees. I don't think you can write off that much a month with a Civic inside the company. $500 in gas, $500 in depreciation, $ 50 in insurance.

I do not think the KM rate should be taxed. As long as it is based on the reasonable km rate. This is the way I do it and have not been taxed on that.
http://www.cra-arc.gc.ca/automotor-allowances/

From the link you posted:
"When your employees complete their income tax and benefit return, they do not include this allowance in income.

Masked Bandit
03-13-2016, 03:20 PM
I wouldn't think the KM reimbursement / claim from CRA wouldn't be taxable because the idea is that you've paid for these vehicle expenses out of pocket with after tax dollars already.

Edit - Should have said "wouldn't be taxable".

CompletelyNumb
03-13-2016, 03:33 PM
The base KM rate is tax free to you personally. Rara nailed it above, if your vehicle is cheap to operate and you drive a lot, take the KM. If it's expensive to run, the company should own it.

jesterme2007
03-13-2016, 09:15 PM
Agree just what I thought. The Car is worth maybe 7k so no true value for depreciation ect.
Ok so I've driving 9500 kms already in 2016 so taking .48 per km is a no brainer. I'll take the KM rate. Thanks ..Any recommendations for a accountant?

Rarasaurus
03-13-2016, 09:36 PM
I have found that it is always good to stay on top of the rules yourself. Many times I take deduction ideas to my accountant that they did not know about or think to ask, because every client is different. IE first home buyers credit, medical expenses(Only really makes sense if you are over ~3g/yr), income splitting for 2015, child allowable write offs etc.

The automobile allowance rates for 2016 are(Changes yearly):
54¢ per kilometre for the first 5,000 kilometres driven; and
48¢ per kilometre driven after that.

For the business side write off:
Home office(Portion of all house bills), cell phone, start up costs, half of meals that are business related, bank fees, interest on any money borrowed.

A quick Google before each tax submission gives you the most recent updates to the rules or incentive credits for that year.

My accountant is retired and just does it for fun now so I cant help there.

RealJimmyJames
03-14-2016, 08:38 AM
Having an accountant who you trust and who keeps on top of things like this is pretty important.
I friend of mine has spoken highly of some guy called Paul at CHH
http://www.chhllp.ca/home.html

Hallowed_point
03-14-2016, 08:41 AM
Originally posted by CompletelyNumb
The base KM rate is tax free to you personally. Rara nailed it above, if your vehicle is cheap to operate and you drive a lot, take the KM. If it's expensive to run, the company should own it.
:thumbsup: