Precedence New Tax Filing Initiatives

Motor Vehicle Expenses

With the new Precedence Tax Filing Initiative, we want to get started on Motor Vehicle Expenses.  

There are 4 areas where motor vehicle expense can occur.

We ask that the spreadsheet and additional details and questions are completed and uploaded to the tax portal by February 28.

Important Reminder

As our team grows, please sure to include all information even though you have discussed with a team member outside the tax team.  Leaving out important information could lead to filing errors.

Who can Claim Motor Vehicle Expenses

1.     Motor Vehicle for Rental Properties

2.     Motor Vehicle for Salaried Employees required to use a personal vehicle

3.     Motor Vehicle for Sole Proprietor Business

4.     Motor Vehicle for Corporations

1.    Motor Vehicle for Rentals

If you own 1 rental property, you can claim motor vehicle expenses if you earn rental income, you do part of the repairs and transport tools and materials to the property. You cannot deduct motor vehicle expenses you incur to collect rents.

If you own 2+ rental properties, you can also claim motor vehicle expenses to collect rents, supervise repairs and manage the properties.

You must use the detailed method.

2.    Motor Vehicle for Salaried Employees

You can deduct motor vehicle expenses if you are required to work away from your employer's business, you were required to pay your own motor vehicle expenses, you did not receive a non-taxable allowance, you have a T2200.

Please also include a completed and signed T2200.

You must use the detailed method however cannot include KM driven to and from your employers place of business.

3.    Motor Vehicle for Business

You can deduct expenses you incur for a motor vehicle if you used it to earn business income.

You must use the detailed method.

4.   Motor Vehicle for Corporations

For incorporated business, you can claim motor vehicle expenses you incur for a personal vehicle if you used it for your incorporated business.  You cannot include KM driven from home to your place of business / office.

Note that if your corporation owns the business vehicle and solely used for business your accounting principles will differ and KM usage is not required to be tracked.  However if that business vehicle was used for personal reasons, KM use for personal reasons must be tracked.

The detailed or simplified method can be used for incorporations.  Both methods would need to be calculated in order to determine which method would be more beneficial.  To calculate the simplified method only total km driven for business is required and no receipts need to be maintained.

Record Keeping and Accounting Methods

The Motor Vehicle expenses are listed on the bookkeeping template and include fuel and oil, interest, insurance, license and registration, maintenance and repairs, lease payments and electricity for zero-emission vehicles.

The monthly ledger on the bookkeeping template is not required however is provided if preferred.

Detailed Method

The Detailed Method entails tracking total KM driven throughout the year (start KM and end KM) and each KM driven for business use.  Each KM for business use must specify for each trip driven: where you drove from and to, the purpose of the trip, the client name if applicable and total KM driven for each trip.  The total of all expenses for the vehicle must he gathered, maintained and totaled as noted on the Motor Vehicle Bookkeeping template.

Simplified Method

The Simplified method for (corporations only) entails tracking only KM driven for business and a flat rate per KM is applied to determine the expense.  Each KM for business use must specify for each trip driven: where you drove from and to, the purpose of the trip, the client name if applicable and total KM driven for each trip. For the Simplified Method there is no need to maintain or gather expenses for the use of the vehicle.  Incorporated business using a personal vehicle can use the Simplified Method or the Detailed Method.  Both methods would need to be calculated to determine which method is most beneficial.

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