This form allows detailed and accurate calculations of expenses incurred for business use of a motor vehicle during the business fiscal year. Data for three separate vehicles can be entered.
Taxpayer and Spouse Share the Deduction
When the business is operated as a partnership with the income and expenses shared with the spouse, the program can transfer data entered in the taxpayer's form to the spouse's form. To do this, the business income and expenses statement must be shared with the spouse. In this case, enter an "X" for the question: "Check this box if the taxpayer and his/her spouse share the deduction".
Note the program does not transfer information to the spouse concerning a vehicle used by a partner for personal purposes. Thus, when the business is operated as a partnership and it has not been indicated that it is a partnership vehicle, data will not be transferred, as the expenses will be considered as personal expenses of the partner.
Motor vehicle description
This section allows the entry of certain permanent data about each vehicle, such as the make of the vehicle and the date of acquisition. This data will be rolled forward from one year to the next.
The date of disposition serves to indicate when during the fiscal year the vehicle was sold. This data is part of the calculation of the maximum eligible amount for interest costs as well as part of the CCA calculations (see the section on CCA).
Operating a business as a partnership impacts on the deduction of expenses from the business income related to the use of a motor vehicle. Certain options are available to the user. Following is a brief overview:
If you are the sole owner of the business and you incur personal motor vehicle expenses for the business, those expenses must be claimed on line 22000 (Motor vehicle expenses except the Capital cost allowance expenses, which must be claimed on line 24640.
If you are a member of a partnership and you incur personal motor vehicle expenses for the business, those expenses must be claimed on the section called "Line 9943 – Other amounts deductible from your share of net partnership income (loss) ".
If you are a member of a partnership and the expenses related to motor vehicles were incurred by the partnership, you can deduct these expenses with the other expenses of the partnership. To do so, place an "X" on the line entitled "Partnership vehicle" for the vehicle in question. The expenses will be deducted on line 22000 of the income and expense statement.
Vehicles which will not be designated as partnership's vehicles will be considered as being the partner's personal vehicles. The expenses associated with these vehicles will be deducted on line 9943 (Other amounts deductible from your share of the net partnership income [loss]) of the income and expense statement.
Keeping records
You can deduct motor vehicle expenses only when they are reasonable and you have receipts to support them. To get the full benefit of your claim for each vehicle, keep a record of the total kilometres you drove and the kilometres you drove to earn business income.
Kilometres
Enter the kilometres driven for business purposes on line 1 and the total kilometres driven during the year on line 2. This data is essential for the calculation of the percentage of vehicle use. If no figure is entered, the program will calculate expenses at 100%.
GST/HST rebate for eligible expenses on which the GST and the HST have been paid
If the taxpayer indicated in the statement of income and expenses that he or she is eligible for the GST/HST rebate, the section related to the GST/HST rebate will be automatically completed for each vehicle. The rate of taxes applied to the expenses will be calculated based on the province of residence.
Chart A – Expenses related to motor vehicles
You can deduct expenses you incur to run a motor vehicle you use to earn business income.
The types of expenses you can claim include:
- line 3: Fuel and oil
- line 4 : Interest (see Section – Maximum eligible for interest expense)
- line 5 : Interest with respect to a motor vehicle other than an automobile
- line 6 : Insurance
- line 7 : License and registration fees
- line 8 : Maintenance and repairs
- line 9 : Leasing costs (see Section – Maximum automobile leasing expenses)
- line 10 : Other
After calculating the total of these expenses, the program next determines the allowable portion of the expenses which can be deducted from the business income (line 12). This allowable portion is obtained by multiplying the total expenses (line 11) by the percentage of use of the vehicle for business purposes (line 1 divided by line 2).
Reimbursements and rebates received during the fiscal year must be entered on line 14. These amounts reduce the allowable portion of expenses. These reimbursements and rebates are not prorated according to the percentage of vehicle use.
Parking expenses incurred elsewhere for the purpose of earning income are fully deductible.
More than one vehicle
If you used more than one vehicle for your business, calculate each vehicle’s expenses separately.
Chart B – Eligible interest for passenger vehicles
You can deduct interest on money you borrow to buy a motor vehicle, automobile, or passenger vehicle you use to earn income.
The program calculates the maximum deductible amount from the date of acquisition. When no date is entered, the program assumes that the automobile has been acquired after 1997, and grants the maximum amounts of $8.33 per day.
The following are the dates and the maximum applicable amounts based on the year assumed by the program:
Acquisition of vehicles:
- From June 18, 1987 to August 31, 1989 $8.33/day
- From September 1, 1989 to December 31, 1996 $10.00/day
- From January 1, 1997 to December 31, 2000 $8.33/day
- After 2000 $10.00/day
The program automatically calculates the number of allowable days for which interest was payable. If the business's fiscal year is less than twelve months, the program adjusts the number of days accordingly.
Chart C – Eligible leasing costs for passenger vehicles
The eligible cost corresponds to:
- $30,000 for cars rented in 2001 and later,
- $27,000 for cars rented in 2000,
- $26,000 for cars rented in 1998 and 1999,
- $25,000 for cars rented in 1997, and
- $24,000 for cars rented before 1997.
The monthly limit is set at:
- $800 for contracts concluded in 2001 and later,
- $700 for contracts concluded in 2000,
- $550 for contracts concluded in 1997, and
- $650 in all other cases.
The lease agreement for your passenger vehicle may include items such as insurance, maintenance, and taxes. In this case, include them as part of the lease charges.
Repayments and imputed interest
When you lease a passenger vehicle, you may have a repayment owing to you, or you may have imputed interest.
Imputed interest is interest that would be owing to you if interest were paid on money deposited to lease a passenger vehicle. You calculate imputed interest for leasing costs on a passenger vehicle only if all of the following apply:
- one or more deposits were made for the leased passenger vehicle;
- the deposit is, or the deposits are, refundable; and
- the total of the deposits is more than $1,000.
For more information, get Interpretation Bulletin IT-521, Motor Vehicle Expenses Claimed by Self-Employed Individuals.
Chart D – Capital Cost Allowance
The "Capital Cost Allowance" section must only be used in the following cases:
- The business is operated as a partnership, and
- The vehicle serves for personal use.
In all other cases, enter the capital cost allowance in Area A of the Self-Employment Statement (line 9936).
Note: The above does not apply to residents outside Québec.
Accelerated investment incentive property
To qualify as accelerated investment incentive property, property must be acquired by a taxpayer after November 20, 2018, and become available for use before 2028. In addition, certain properties are excluded from the definition, in particular:
- property acquired on a rollover basis (section 85 ITA), or following an amalgamation (section 87 ITA) or the wind-up of a subsidiary (section 88 ITA);
- property previously owned or acquired by the taxpayer or by a person or partnership with which the taxpayer did not deal at arm’s length at any time when the property was owned or acquired by the person or partnership.
Qualified property acquired after November 20, 2018, will not be subject to the half-year rule, but will benefit from an increased CCA in the year of acquisition. The modified subsection 1100(2) ITR incorporates the existing half-year rule and provides for the new increased first-year allowance according to the CCA class:
- The general rule that applies for all CCA classes subject to subsection 1100(2) ITR (except classes 12, 13, 14, 15, 43.1, 43.2 and 53) allows for an increase in the UCC balance before CCA equal to 50% of the net additions (these is no addition for property acquired and available for use after 2023 and before 2028).
- Specific rules that apply to classes 43.1, 43.2 and 53, benefit from a 100% CCA of the cost of acquisition for property in these classes acquired after November 20, 2018, and before 2024. A phase-out of the increased CCA is defined for each CCA class for property available for use after 2023 and before 2028.
- The half-year rule, which always apply to property that do not meet the definition of “accelerated investment incentive property” from subsection 1104(4) ITR as well as property acquired and available for use before November 21, 2018, and after 2027.
In addition, specific rules are provided for CCA classes 13 and 14 in paragraph 1100(1)(b) and (c) ITR. Therefore, for accelerated investment incentive property, the CCA will be equal to 150% of the regular calculated CCA in the year of acquisition of the property.
For more information, consult the Canada Department of finances Web page, 2018 Fall Economic Statement: Investing in Middle Class Jobs
The new measures will be taken into account in the calculation of the amounts on the lines Base amount for CCA and CCA when the acquisition date of the property is after November 20, 2018, and this date is part of the fiscal year end of the business.
The calculation of capital cost allowance must be made taking into account the rules with respect to "passenger vehicles", which are:
Passenger vehicles whose cost is $30,000 or more (before taxes) are in category 10.1.
The maximum acquisition cost for a vehicle to be in category 10 has been changed over the years. The figure of $30,000 is applicable as of January 1, 2001 and later. If necessary, according to the date of acquisition, replace $30,000 with the following amounts:
- $27,000 for vehicles acquired in 2000,
- $26,000 for vehicles acquired in 1998 or 1999,
- $25,000 for vehicles acquired in 1997,
- $24,000 for vehicles acquired before 1997.
- Only the first $30,000 may be subject to capital cost allowance. Unrecovered federal and provincial sales taxes are added to this amount.
- A separate class 10 must be created for each eligible vehicle. Each new acquisition is subject to the half-year rule.
- No recapture or terminal loss may result from the disposition of a vehicle included in class 10. However, in the year of disposition of the vehicle, a capital cost allowance representing half the deduction normally claimed is granted.
- No terminal loss can result from the disposition of a vehicle included in class 10. However, if the disposition generates a recapture, the amount of this recapture must be included in income.
- No capital cost allowance is permitted when a class 10 vehicle has been acquired and disposed of in the same year