Why You Should Use Your Personal Vehicle for Business Use Watch Video

Comments 8

1. Hi Allan,
   To date, my corporation has been paying me an allowance of 55c/km (and 49c/km > 5000km). It was my understanding that if I employ that method, I cannot also claim a business-use percentage (95% in my case) of my vehicle expenses (gas, insurance, etc).

   Am I incorrect? The video could be perceived in a way that makes me think that I could claim BOTH the mileage allowance AND 95% of my vehicle expenses (which I thought not to be true).
   It could also be perceived to mean EITHER / OR (which I thought to be true)

   Thank you very much for the great blog material, as always!

   Reply

   1. Hi Neelan,

      You have two options for your personally owned vehicle.

      (1) Receive a tax-free vehicle allowance of 55 cents per KM for the first 5,000 KM’s and 49 cents for each KM thereafter
      (2) Receive a taxable flat monthly allowance (e.g. $600 / month)

      You cannot do both. Remember to complete form T2200 so that you can deduct your car expenses on form T777, if you are receiving a flat monthly allowance.

      Reply

2. Hi, I’m purchasing a Mercedes. I’m a small business owner and I’m wondering if it’s better to buy the car under my business or personal id. My understanding is also that the amount compensated for s-corps is based on the market rate value of the vehicle.
   I’m also somewhat concerned about the possibility of the company being held liable in the advent of an unfortunate accident.

   Reply

   1. Hi Rowe,

      Thanks for your question. If 50% or more of your driving in the year is business related, then consider purchasing or leasing a vehicle through your corporation. The benefit is that the corporation can write-off 100% of the vehicle’s expenses. You will have to report a taxable benefit on our return for the personal use of the vehicle, but this benefit will be reduced since you are driving the vehicle primary for business purposes.

      For a more in depth answer, I need additional information from you such as the specific number of KMS you’ll be driving each year for personal and business purposes, cost of the vehicle, and running expenses for the vehicle.

      Reply

3. Hi Allan,
   I am running a convenient store under my corporation and I am on payroll of my corporation. I use my personal car for driving to store daily which is 80% of total vehicle usage. What would be best option for me to claim all motor related expenses on corporation income or my corporation pay me 0.49/Km. Is there any option if I purchase car on corporation name and than use for driving to store?

   Thanks,
   Biraj

   Reply

   1. Hi Biraj, driving to your place of employment from your home and back again to your home each day is not eligible for a tax deduction and is not eligible for a tax-free car allowance. Driving to meet suppliers / vendors, picking up supplies, and other work related trips are eligible for a tax deduction or tax-free car allowance.

      If you drive a lot for work (e.g. 50KMS per day) and the operational costs of your vehicle are on the low side, then it’s better to receive a per KM allowance (e.g. 54 cents for the first 5,000 KMs and 49 cents for each KM thereafter). This allowance is tax deductible to your corporation, and tax-free to you.

      If you do not drive a lot for work, then consider receiving a fixed monthly allowance (e.g. $300 / month) to cover the operational costs of your vehicle related to your work driving.

      Reply

4. Hi Alan,

   Thanks a lots, really appreciate for you advice and suggestions.

   Regards,
   Biraj Patel

   Reply

   1. You’re welcome.

      Reply