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 of 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 "Description and amount of capital additions (other than
AIIP):" 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.
Now you have five (5) CCA Class:
Class 10, motor vehicle less than $30,000, before
taxes.
Class 10.1, motor vehicle cost greater than $30,000
before taxes.
Class 54, Zero Emission, electric, less
than $55,000.
Class 55, Taxi Vehicle or Vehicle used for
rental purposes, Zero Emission.
Class 56, Zero Emissions, that is not designed
to operate on public roads.
We suggest you consult the following link, for Class 54 and
55:
https://www.canada.ca/en/revenue-agency/services/tax/individuals/topics/about-your-tax-return/tax-return/completing-a-tax-return/deductions-credits-expenses/line-22900-other-employment-expenses/capital-cost-allowance/classes-depreciable-properties/zero-emission-vehicles.html
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/en/online-services/forms-and-publications/current-details/in-155-v/
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: 20220309093325DE.xml
Webpage: KPA320-20220309093325DE.htm
