Accountant Toronto Discusses Leasing vs. Buying Automobile Watch Video
Allan Madan, CPA, CA
As a business owner, have you ever wondered whether it’s more tax efficient to lease or buy an automobile? Read More…
Disclaimer
The information provided on this page is intended to provide general information. The information does not take into account your personal situation and is not intended to be used without consultation from accounting and financial professionals. Allan Madan and Madan Chartered Accountant will not be held liable for any problems that arise from the usage of the information provided on this page.
ABOUT THE AUTHOR
ALLAN MADAN
CPA, CA
Allan Madan is a CPA, CA and the founder of Madan Chartered Accountant Professional Corporation. Allan provides valuable tax planning, accounting and income tax preparation services in the Greater Toronto Area.
Would the same CCA allowance work on buying a used vehicle from a dealership?
Yes, it would work in the same manner, whether you bought a new or used vehicle.
Allan Madan, CPA, CA
Tel: 905-268-0150 x 2
I have a small incorporated business. I am buying a car that is 2 years old that will be financed thru the dealer at 0%financing. Does it matter if it’s in my personal name or company name? I also share my car with my 2 sons . If the car goes under the company, then do I need insurance in the company name and how will that affect my boys driving a company car.
Can you tell me the best way to write off my car?
Thanks for the information. I want to be sure I read this correctly. If I own my own business I can write off 100 percent of my lease provided the car is less than $30,000?
If income is over 200,000 for 2016 (self-employed), and it’s September 2016 now, is it better to buy or lease a vehicle that’s around $50,000 at this point in the year? Average lease amounts are $750-$900 for what I’m looking at.
Hi Dani,
Leasing a vehicle now will reduce your taxable income by the deductible portion of the lease payments.
Hi Madan, I started financing a car $412 per month including all taxes with 0 down. the car will be 30% utilized for business. can you please tell me how to report when filling the tax
Hi, Afree. If you are self-employed, report all car expenses, the KMs driven in the year for business / work and the total KMs driven in the year on form T2125. If you are employed, and have a signed form T2200 (Declaration of Conditions of Employment) from your employer, then report this information on form T777.
If my incorporated business is making around $200K in 2017 and I plan to buy an $80K car, would it be better to buy or lease? The buying option is $3K cheaper due to interest rate offers right now. Thank you
Hi, Ali. Go with the buying option.
Regarding the previous post “If my incorporated business is making around $200K in 2017 and I plan to buy an $80K car, would it be better to buy or lease? The buying option is $3K cheaper due to interest rate offers right now. Thank you”
I had the same question… so if it makes sense to buy, are there any tax strategies for the amount of purchase over 30k limit.
In essence, are there any strategies at all if the incorporated business decides to buy a vehicle over the 30k?
Hi David, to properly answer your question, I will need additional information:
– lease term
– residual value of the vehicle at end of lease
– interest rate for lease
– amount of monthly lease payment, plus list price of vehicle
– if you are financing, then I need to know (a) term of loan (b) interest rate (c) purchase price
If you purchase a vehicle, depreciation cannot be claimed on amounts over $30,000. There are no strategies available to get around this rule.
Hi Mr Madan.
You have mentioned that
“Let’s assume that you have entered into a five year lease for an automobile having a MSRP of $30,000 with a monthly lease amount of $350, including taxes. Therefore, each year you would be entitled to a deduction of $4,200 (i.e. $350 x 12).”
My Question
Do we have to keep a track of how many kms has been driven for personal use /business use in case of a lease? and expense the amt accordingly?
I
Hi Ashish,
If you personally lease the vehicle for use in your business, then you have to track the KMs driven for both business and personal purposes. The KMs driven for business purposes will count toward a tax deduction.