Buying a car after incorporating?

[eblend]

Hey guys,

I know I should be talking to a tax accountant on this, but just wanted to get base information.

If all things work out, in the next two weeks I will be incorporating. I will need a vehicle for work and want to buy one off my friend. It's a used car for $6000. Now, I know once I incorporate I can buy a vehicle for work purposes up to 30k, and it can be used so far as I can tell.

So, the question is, how do I do this? My buddy wants to sell next week (he was going to trade it in, but I offered him the same cash so he will sell to me instead). I want to make sure I buy it off him after I incorporate, so he won't officially sell it to me until a later date. The plan is that he will drop it off at my garage, I will park it there, then he will take the plates and everything off the car and cancel his registration for the vehicle. Does he need a bill of sale to cancel? Should I tell him to keep it registered for a few weeks still until I incorporate? My biggest concern is timing, I want to make sure I actually buy it and have the paper work after I incorporate, but he is looking at getting a new car before I can incorporate so the timing is a week or so off.

Any assistance?

[300zxfairlday]

He can cancel the insurance whenever he wants just dont sign the bill of sale until after your incorporated or date it for a future date

[pheoxs]

Speak with your accountant first, there may be restrictions on the age of car for tax purposes. It's been a long time since I looked into it but I think there's something that it can't be beyond a certain age (10 years or something). Though I might be thinking of something else so don't quote me on that

[Mibz]

Originally posted by pheoxs
Speak with your accountant first

[mazdavirgin]

Originally posted by eblend
Hey guys,

I know I should be talking to a tax accountant on this, but just wanted to get base information.

If all things work out, in the next two weeks I will be incorporating. I will need a vehicle for work and want to buy one off my friend. It's a used car for $6000. Now, I know once I incorporate I can buy a vehicle for work purposes up to 30k, and it can be used so far as I can tell.

So, the question is, how do I do this? My buddy wants to sell next week (he was going to trade it in, but I offered him the same cash so he will sell to me instead). I want to make sure I buy it off him after I incorporate, so he won't officially sell it to me until a later date. The plan is that he will drop it off at my garage, I will park it there, then he will take the plates and everything off the car and cancel his registration for the vehicle. Does he need a bill of sale to cancel? Should I tell him to keep it registered for a few weeks still until I incorporate? My biggest concern is timing, I want to make sure I actually buy it and have the paper work after I incorporate, but he is looking at getting a new car before I can incorporate so the timing is a week or so off.

Any assistance?

Company cars are a real hot spot for getting yourself audited by the CRA. So yeah you might want to talk to an accountant and make sure you are squeaky clean. There are lots of weird CRA rules around cars.

[syscal]

+1 Talk to an accountant first.

Vehicle allowance might work unless the company is paying for gas.

[msommers]

Have you considered leasing instead?

[phreezee]

Accountant will most likely tell you to lease and that buying isn't a good idea. The type of business is important i.e. a work/delivery truck vs. a commuter car.

[carson blocks]

I have a vehicle under my corporation, my accountant says it's 100% justifiable as I'm an oilfield contractor, and it's a 3/4 ton pickup I use for running the lease roads. I do have multiple personal vehicles registered in my name if CRA comes knocking. If your vehicle has a low cost to operate (ie. not a $$ 3/4 ton diesel 4x4), you might be further ahead to keep it personal, log business mileage, and withdraw the CRA rate of .55/km - .49/km from your corporation tax free. If it's a $6k used car, you'll probably make more money doing it this way, and not get any heat from the CRA.

[CapnCrunch]

Originally posted by eblend
Hey guys,

I know I should be talking to a tax accountant on this, but just wanted to get base information.

If all things work out, in the next two weeks I will be incorporating. I will need a vehicle for work and want to buy one off my friend. It's a used car for $6000. Now, I know once I incorporate I can buy a vehicle for work purposes up to 30k, and it can be used so far as I can tell.

So, the question is, how do I do this? My buddy wants to sell next week (he was going to trade it in, but I offered him the same cash so he will sell to me instead). I want to make sure I buy it off him after I incorporate, so he won't officially sell it to me until a later date. The plan is that he will drop it off at my garage, I will park it there, then he will take the plates and everything off the car and cancel his registration for the vehicle. Does he need a bill of sale to cancel? Should I tell him to keep it registered for a few weeks still until I incorporate? My biggest concern is timing, I want to make sure I actually buy it and have the paper work after I incorporate, but he is looking at getting a new car before I can incorporate so the timing is a week or so off.

Any assistance?

You'll be better off claiming 55 cents per km than buying a $6000 vehicle outright under your corporation. But it personally, track your mileage, profit.

[eblend]

Originally posted by CapnCrunch


You'll be better off claiming 55 cents per km than buying a $6000 vehicle outright under your corporation. But it personally, track your mileage, profit.

Thanks for the info guys.

Perhaps I will just buy it personally and then claim the 55c/km. I think I was confused on this whole thing. Cool, that makes it much easier actually.

[KappaSigma]

Not sure why timing is an issue. Just buy it personally then do a section 85 rollover after if you want.

[Xtrema]

Originally posted by eblend


Thanks for the info guys.

Perhaps I will just buy it personally and then claim the 55c/km. I think I was confused on this whole thing. Cool, that makes it much easier actually.

Only safe way I know unless you have a fleet of vehicles and a team driving them. Make sure you log every trip.

[Jlude]

I just bought a new company vehicle. I don't travel a lot by vehicle, so it's really only used for site visits, banking, shit like that. Just bought it outright and registered/insured it under the company name. Pretty straight forward.

[Maxt]

You can buy whatever you want as long as you can show where you use it. My previous employer has a couple of motorcycles as company vehicles. There is no law dictating what you have to drive.

[Zhariak]

Originally posted by CapnCrunch


You'll be better off claiming 55 cents per km than buying a $6000 vehicle outright under your corporation. But it personally, track your mileage, profit.

This is true!

I checked in to it a while ago in detail. There's a bunch of restrictions on buying/leasing vehicles for work purposes (and I mean tons). It's always best to buy it, and then charge the corporation usage...

[chongkee_]

Originally posted by Zhariak


This is true!

I checked in to it a while ago in detail. There's a bunch of restrictions on buying/leasing vehicles for work purposes (and I mean tons). It's always best to buy it, and then charge the corporation usage...

My accountant said the same thing.
Have it under the corporation if you're putting your company logo and all that all over the car. Otherwise buy it personally and just charge the company.

[Xtrema]

Originally posted by Maxt
You can buy whatever you want as long as you can show where you use it.

You can do whatever you want, it's all about passing audit.

There is a reason why mileage is the preferred way. It easier to pass audit.