Car tax write-offs for work/business? what are the advantages?

[dinamix]

Can someone explain to me how writing-off your car works?
TIA!

[Zedbra]

If you are an employee, the company needs to supply you with a T2200 tax form. Said form states you must use your own vehicle to perform your job, and also states if the company pays you a car allowance or mileage per kilometre. Some companies pay both - mine does. If the company gives you a monthly car allowance, then they are not required to pay the mileage standard set by the CRA (around $0.56 per kilometre). (However, a good accountant can often weigh the difference between what the company pays, what the CRA credits should have been, and that gives you a further write-off.)

You must keep track everyday of all the kilometres that you use your car for business use. Driving to and from the office does not count - that is considered personal mileage. In fact, CRA only considers mileage after you reach your FIRST appointment as business use (though this is loosely observed).

Keep all receipts for repairs, supplies, and parts needed throughout the year to keep the car running. I keep everything - wiper receipts, cleaners, gas receipts, tires, oil changes, etc. If you have financed or leased the car, then (a percentage of) the interest can also be written off.

Tax credits are then calculated based on your cost to run the vehicle vs monies paid by the company (either as car allowance, mileage allowance, or both) vs percentage of business/personal use of the vehicle. You would be surprised how much of a benefit this is against your take-home wages. I often write-off up to $12k per year on my taxes and is sometimes the only reason I get a CRA refund.

If you need more precise details, contact a CGA - they can explain how everything is calculated and charge you a pretty penny to do such.

[dared3vil0]

^ That was an awesome explanation, I was wondering myself.

[heleu]

Here's the CRA link:

http://www.cra-arc.gc.ca/tx/ndvdls/t...rvhcl-eng.html
For me, the capital cost allowance (depreciation) is the most significant part of the write-off.

[gars]

I work for a small start-up company. I don't get mileage reimbursement - but I do write off a tank of gas every once in a while - because I do drive around a little for work. Whether it's to the store to pick something up, or to a work site to deliver something or fix something. Maybe a trip once every week or once every two weeks.

If I keep track of my mileage and figure that out as a percentage of my yearly total mileage on the car, can I fill out the form and get a portion of my income tax back then? Am I reading this properly?

[Zedbra]

Originally Posted by dared3vil0

^ That was an awesome explanation, I was wondering myself.

Been doing it for over 12 years now and because the write off goes against wages earned, I try to maximize my vehicle expenses write-offs. It can drop you down a tax bracket or two - and those feds get enough of my money.

[Expresso]

Originally Posted by gars

I work for a small start-up company. I don't get mileage reimbursement - but I do write off a tank of gas every once in a while - because I do drive around a little for work. Whether it's to the store to pick something up, or to a work site to deliver something or fix something. Maybe a trip once every week or once every two weeks.

If I keep track of my mileage and figure that out as a percentage of my yearly total mileage on the car, can I fill out the form and get a portion of my income tax back then? Am I reading this properly?

As Z says you need your company to provide you a T2200 tax form before you can.

[bomboi1]

is it more benefits to leasing or buying a car based on tax write offs?