Should my company own my vehicle?
Wondering how to write off your vehicle expenses for business? This discussion is driven by your business usage.
>90% business usage
If your vehicle is used exclusively for business (90% of the time or more), then your corporation should own the vehicle (such as a work truck or delivery van). The company should then pay for and claim all costs related to that vehicle. If the company owns the vehicle, consider registration, insurance, etc. all being in the company name.
If you previously owned it personally, you can consider doing a bill of sale at fair market value to the company.
50% to 90% business usage
When business use is in this middle range, several factors need to be taken into consideration. Canada Revenue Agency (CRA) will analyze many of these factors to see if you have treated the vehicle in an appropriate manner.
This is much more of a grey area. We often need to have a detailed conversation about your specific scenario to figure out which is the easiest and most tax-efficient. We have a detailed article about vehicle expenses if you want to learn more.
<50% business usage
If you use your vehicle for work less than half of the time, track your mileage using an app like MileIQ and take the mileage rate per the CRA.
Regardless of business usage, you need to keep this supporting information for each year:
- Mileage log
- Bill of sale
- Receipts for any expenses paid by the business