Self-employment - Change of vehicle - Class 10You have changed your vehicle in the tax year, and both vehicles - the old and the new - are in the same class of cars, namely the cars that are less than $30,000 before taxes.
At first, you must calculate all the expenses that you've incurred for both vehicles, such as fuel costs, insurance expenses and others. Furthermore, you will have to calculate the total kilometers (KM) traveled in the tax year as well as the number of kilometers traveled for business purposes. To do so, follow the steps below:
1- On the "Left side menu of the Interview tab", select the "Self-employment income" section.
2- Complete the "Business ID" and "Income, expenses" pages according to the information that you have. Click on "Next" at the bottom of the page after you've completed each page.
3- At the subsection "Motor vehicle expenses" page, in the first part, the information on your hold vehicle were carried over. Make sure that "Class 10" has been selected for the CCA class of the vehicle.
4- On the second (2nd) section of this page, "Addition of a vehicle" on line "Description of the vehicle and vehicle cost" enter a brief description of the car and its acquisition cost.
5- At the line "Application of half-year rule to current year additions", choose "Yes" from the drop-down menu.
6- In the third (3rd) section "Disposition of the vehicle", enter the information on selling your old vehicle. As the price sold you enter the total amount on line "Proceeds of disposition of an asset".
7- For the line "ABC of the disposition", enter the Adjusted Cost Base of the vehicle sold.
8- At the line "Did you liquidate all asset in this class?" the answer is "No".
9- For the line "ACB of the disposition", indicate the total amount received in payment. If the proceeds of the disposition of the property exceed the ACB, the result will be a capital gain.
10- In this case, return to "Interview setup" and choose "Investment income and expenses" icon, check "Capital gains (or losses) and capital gain history" and click "Next" at the bottom of the page.
11- You must enter the gain separately under the section "Capital gains (or losses) & ABIL" and on the screen to the right, select "Real estate, depreciable property and others properties" option.
12- On the page that appears, enter the information on the sale of your vehicle.
13- If you want to limit the CCA, for the line "Limit to the CCA of this vehicle (leave blank for maximum CCA)", enter the desired amount. Otherwise, leave the field blank to obtain the maximum CCA.The program will carry over the amounts on lines 9281 and 9936 of federal form T2125 and on lines 220 and 240 of Quebec form TP-80.
Also, if you made a capital gain, Schedule 3, and schedule G for Quebec residents, will be generated by the program.
We recommend that you keep a record of all expenses and a daily mileage log of your vehicle.
For more information, consult the CRA's guide by clicking on the following link:
https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/t4002.html
ID: 20211006110415DE.xml
Webpage: KPA320-20211006110415DE.htm