Self-employment - T2125 - Change of vehicle - Class
10.1
You have changed your vehicle in the tax year, and both vehicles
- the old and the new - are in Class 10.1, i.e., cars whose value
exceeds $30,000 before taxes.
According to CRA rules, you must enter the information for each
vehicle separately, that is in two separate 10.1 categories.
1- On the "Left side menu of the Interview
tab", select "Self-employment income" and
on the right-hand page that appears, select the type of income that
applies to your situation.
2- Complete the "Business ID" and "Income,
expenses" pages. Click on "Next" at the
bottom of the page.
3- On the page ''Motor vehicle expenses'', if you
used the same software last year the basic information of your old
vehicle will have been transferred. If not, choose the option
''Purchased motor vehicle'', enter the information
for your first car, including the ''Opening balanced
of the undepreciated capital cost'', the class, the
kilometers travelled for business and also the total kilometers
travelled during the year.
4- For the line "Adjusted cost base of the
vehicle", enter the ACB of the vehicle sold.
5- In the third (3rd) section "Disposition of the
vehicle", enter the information on selling your old
vehicle. For the price sold, of the vehicle, enter the total amount
on the line "Proceeds of disposition of an
asset".
6- For the line "ABC of the disposition", enter
the Adjusted Cost Base of the vehicle sold.
7- For the line "Did you liquidate all assets in this
class?" the answer is "Yes".
8- 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.
9- 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.
10- You must enter the gain separately under the section
"Capital gains (or losses) & ABIL" and on the
screen to the right, select the "Real estate, depreciable
property, and other properties" option. Schedule 3 will be
produced by the program if you made a gain that will be entered
on line 1300 of Schedule 3 and the gain
will be reported on line 12700 of the federal
return.
11. Click on "Arrow" between
"Next" and "Previous" the
"Vehicle expenses" page will appear, click the
plus sign "+" left of "Purchased motor
vehicle".
12- A page will open called "Purchased vehicle"
enter in this page information on this new vehicle. On the line
"Opening balance of the undepreciated cost" do not
enter any amount;
13. As with the previous vehicle, enter expenses for this new
vehicle during the tax year, the total kilometers traveled and
traveled for business purposes;
14- In the second section of this page "Addition of a
vehicle" on the line "Description of the vehicle
and vehicle cost" enter the price paid for the new
vehicle, and a brief description;
15- On the line "Application of half-year rule to
current year additions" select "Yes" from
the menu;
16- If you want to limit the CCA on line "Limit to the CCA
of this vehicle (leave blank for maximum CCA)", enter the
desired amount. Again, leave blank to get 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. In addition, please note that in Area A, "Calculation of
capital cost allowance (CCA) claim", in column 3 titled "Cost of
additions in the year" the amount entered by the program will be
$30,000 plus all applicable taxes.
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.
We recommend that you consult the CRA guide by clicking on the
following link:
https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/sole-proprietorships-partnerships/business-expenses/motor-vehicle-expenses.html
ID: 20211005111432DE.xml
Webpage: KPA320-20211005111432DE.htm
