Self-employment - Process of disposition for a vehicle without replacementYou disposed of your vehicle during the tax year, and you have not replaced it.
If you've finished running your business, be sure to indicate that on the income and expense page.
At first, you must calculate all the expenses that you've incurred for your vehicle for the time you used it, such as fuel costs, insurance expenses and others. Also, you will have to calculate the total kilometers (Km) traveled in the tax year as well as the number of kilometers traveled to for business purposes. To do this, follow the steps below:
1. On the "Left side menu of the Interview tab" located on the left side of the screen, select the item "Self-employment income''.
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. On the "Motor vehicle expenses" page, on the first section, enter the information pertaining to the vehicle, including the total kilometers traveled as well as the number of kilometers traveled for business purposes.
4. On the line "Opening balance of the undepreciated capital cost" enter the amount that appears in column 7 of the Area A of the T2125.
Make sure that the "CCA class of the vehicle " is selected.
5. For the line "Description and adjusted cost base of the vehicle" enter the ACB of the vehicle sold.
6. For the line "Proceeds of disposition of an asset" indicate, total amount received in payment. If the proceeds of the disposition exceed the ACB, the result will be a capital gain.
7. On this case, you must enter the gain separately under the section "Capital gains & ABIL" and on the screen to the right, select "Real estate and other depreciable property" option.
8. To add the "Capital gains (or losses) & ABIL" return in "Interview setup" in on your right screen, select the "Investments income and expenses" icon and check the box "Capital gains (or losses) and capital history" and click "Next" at the bottom of the page
9. For the line "ACB of the disposition", indicate the adjusted cost base of the vehicle sold in the tax year.
10. On the line "Did you liquidate all assets in this c lass?'' Select "Yes" in the drop-down menu, if applicable.
11. If you received insurance proceeds to reimburse you for the loss of the vehicle after a loss, enters the amount on the line "Proceeds of disposition of an asset".
The program will report the amounts on the appropriate lines on Form T2125 federal as well as lines of form TP-80 Quebec.
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: 20211006140353DE.xml
Webpage: KPA320-20211006140353DE.htm