Tuesday, October 30, 2007

Vehicle Lease for Small Businesses

We're realizing that it might make more sense to get a second vehicle now that my consulting gig is going to take me to various places in the city throughout the year. I began looking into what the benefits were for having a lease and what can be written off.

If you're going to be using a vehicle partially for work and partially for personal use, then you can only claim use for work purposes. However, at this site (http://www.cra-arc.gc.ca/tax/individuals/topics/income-tax/return/completing/deductions/lines206-236/229/motor/menu-e.html) I found an interesting statement:

"Employment use of a motor vehicle
If you use a motor vehicle for both employment and personal use, you can deduct only the percentage of expenses related to earning income. To support the amount you can deduct, keep a record of both the total kilometres you drove and the kilometres you drove to earn employment income. We consider driving back and forth between home and work as personal use." (emphasis mine)

So...let me get this straight: you can use a vehicle you use to "earn employment income", but driving between home and work doesn't fall into that category?! So if you're a consultant, and you're assigned to be on-site to a client, that is technically driving to home and work...isn't it?

I'll need to look at this a little more closely...


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