Vehicle expenses for business purposes
If 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.html
For 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.pdf
The 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
