Vehicle expenses for business purposesIf you are self-employed and need to report expenses for a vehicle in connection with the operation of your business, to enter your expenses, please follow this procedure:
1. On the "Left-side menu on the interview tab", select "Interview setup".
2. On the screen to your right, go to the "Self-employment" group, check the box "Self-employment business income" and then click "Next" at the bottom of the page.
3. Return to the "Left-side menu on the Interview tab" select "Self-employment income", and on the page to your right choose the option that corresponds to your situation.
4. Complete the "T2125 - Business identification" page and click "Next" at the bottom of the page.
5. On the "Income and Expenses" page, enter your information and click "Next" at the bottom of the page.
6. This will bring you to the "Motor Vehicle expenses" page, where you may choose the appropriate option.
7. Enter the information pertaining to the vehicle and choose the appropriate option from the drop-down menu for the line "Level at which the expense is claimed", choose the "Business expenses" option. However, note that you could choose another option.
8. If you have opted for a purchased vehicle and it is the same vehicle as the previous year, on the line "Opening balance of the undepreciated capital cost" enter the UCC which you will find in Area A of Form T2125 in column 10 of your tax return of the previous year.
However, if this is the first year of use of this vehicle for business purposes, do not enter an amount on this line. Go to the line "Amount of capital additions" instead and enter the fair market value (FMV) of the vehicle.
9. For a purchased vehicle, on the line "CCA class of the vehicle" select the class of your purchased vehicle from the drop-down menu. The CRA considers that a vehicle with a cost that is less than $30,000 before taxes is Class 10 and other vehicles are considered Class 10.1.
10. To determine the part of the expenses applicable to your business, enter the "Kilometres travelled for business or work" and the "Total kilometres travelled".
11. Then, enter the motor vehicle expenses you have incurred.
12. If you have a leased vehicle, it is important that you complete the leasing cost section appropriately.
NOTE: For Quebec residents, if you have entered an expense for short-term rental due to maintenance or repairs or other circumstances, please follow the instructions:
a. On the line "Short term car rental fees (100%)", enter the amount you are claiming for the federal. For Quebec, click the "Maple leaf" icon and enter $0,00 in the new field.
b. Return to the line "Maintenance and repair for the year". You probably entered an amount for the maintenance or repair; otherwise enter $0,00. Click on the "Maple Leaf" icon, and in the field for Quebec, add your short-term rental costs to the cost of maintenance and repair.For more information on business expenses, please visit the following links from the CRA:
https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/business-expenses.html
https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4002.htmlFor residents of Quebec, please consult the guide "Business and professional income" by clicking on the following link:
https://www.revenuquebec.ca/documents/en/publications/in/IN-155-V%282017-11%29.pdfThe program will carry over the vehicle expenses to lines 9281 and 9936 of federal form T2125, as well as to lines 220 and 240 of Quebec's TP-80.
NOTE: We suggest that you keep a record for each year that you claim expenses. Mainly for registering the use of your vehicle, this record must show both the total kilometres you drove and the kilometres you drove for business purposes.
ID: 20191004151218NIXX.xml
Webpage: KPA320-20191004151218NI.htm