What are the different variations in which I can claim the vehicle expenses if I have a corporation?

Either you, or your corporation can claim the vehicle expenses directly or indirectly, depending on which name the vehicle is registered under.

If the vehicle is under the corporation, the corporation can claim the vehicle expenses, including fuel, maintenance, repairs, insurance, interest, etc. If the vehicle is under your name, and you are employed by your corporation, you can claim the employment-use portion of the vehicle expenses on your personal tax return. However, you will need additional paper work for this from your employer like the T2200 form and you must satisfy some specific conditions. For both the above, you must keep the receipts, invoices, and paperwork handy in case the CRA asks for it.

Alternatively, if the vehicle is under your name, you can get your corporation/employer to pay you a nontaxable vehicle allowance, as long as it is reasonable. Reasonable allowance means that it is $0.54 per km for the first 5,000 km and $0.48 for thereafter. For any of these options though, you must keep a log book detailing the destination location, number of km driven, total time, etc.

ABOUT THE AUTHOR

ALLAN MADAN

CA.CPA.CGA

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.

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