Business Use of Personal Vehicle

by Tina
(Vancouver)

Sole Proprietorship Business Use of Spouse's Passenger Vehicle



I am the doing the bookkeeping for a sole proprietorship. He uses his wife's passenger vehicle for picking up inventory approximately 4-5 times a month. Each trip averages between 30-60 kms. He has kept all the vehicle-related receipts and a detailed log book.

The car is insured as a passenger vehicle in BC, so 6 or fewer business trips per month are allowable under this type of insurance by ICBC. The wife uses the car solely for pleasure (not at all for work or business). So my questions are these:

1) Do I enter his business related expenses the same as if he owned the car himself, or must I work out some type of leasing arrangement between them, where he repays her the business portion of the expenses (approx 20%).

2) His wife sold her old car and bought a new one this year. Am I correct in assuming that he can't claim any Capital Cost Allowance for the vehicles in question?

Thank you!



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Hi Tina,

Take a look at Business Use of Your Personal Vehicle.

Pay particular attention to the section on "Business Insurance for Your Personal Vehicle". To be safe, I like the business clause written on the policy and it should be clear that the policy allows him to drive it ... or ensure he has cleared it with ICBC as it is better to be safe than sorry.

I think you would be safe following the same rules as you suggested in #1... but if you aren't sure, phone CRA to see what they think.

In order to claim CCA, he would have had to have added the car as a business asset, each year allocating his business useage. This one I would check with CRA as the car is not in his name. Sorry I can't be more help.



P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.

Comments for Business Use of Personal Vehicle

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Oct 06, 2011
 What CRA says...
by: Tina

I phoned CRA about this question and the agent said that because the car is the family car, the sole proprietor can treat it as if it were his own and he can claim CCA on it as well (it was purchased this year). Thanks
Oct 08, 2011
 Business Use of Personal Vehicle
by: Lake

Thank you for taking the time to post back here Tina!
Nov 30, 2011
 Business Use of Personal Vehicle
by: Kristy, Calgary

A vehicle was purchased for work use under the owner's name. He registered the company in the same month he bought the truck.

What is the best way to treat this? He wants to claim the GST in the company.

He paid for it with his own money. Would he show it as a loan to the company and place the truck as an asset.



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Kristy,

Here are 2 links to read:

How to Claim Business Vehicle Expenses

How to Claim Input Tax Credits Relating To Business Use of Your Personal Vehicle

You may also want to visit The Vehicle Forum.

You were wondering whether this transaction should be booked as a loan ... only if the business is going to pay him back. Normally, I book this type of transaction as an owner's contribution, assuming this is a sole proprietorship.
Nov 07, 2015
 Startup Corporation
by: Bookkeeper, Kamloops, BC

The situation:

Start-up corporation with a single shareholder. First year filing income tax. The company had a net loss and the only shareholder made an advance to the company at start up (paid for various start up costs out of pocket). This shareholder also used the company vehicle throughout the year for personal use.

Question:

If this is a taxable and no wages were paid out during the year, can the taxable benefit be calculated and then used to reduce the advance from the shareholder? Or does a T4 actually need to be created even though no wages were paid out during the year? Alternatively, to eliminate any taxable benefit and the need for a T4, should the shareholder repay the business for personal use of the vehicle?

I'm incredibly appreciative of any help you can give and am so grateful for having your site awhile ago. Thanks so much!
Nov 07, 2015
 Kamloops Bookkeeper
by: Lake

Please take time to read through my entire section on CCPCs so as to familiarize yourself with how to record a contribution to the business by a shareholder.

Also take the time to read all the options on how to get reimbursed for auto travel expenses.

Take care and lots of success with the start-up.
Jul 12, 2016
 Claiming truck expenses
by: Sylvie from Ontario

If you're a sole proprietor and your business truck is an asset of your business can you claim 100% of the gas expense and repair expense on the T2125?
Jul 12, 2016
 Sylvie
by: Lake

Take a look at my chat on "How to Claim Business Vehicle Expenses". It should help you out.

https://www.bookkeeping-essentials.com/business-vehicle.html

It explains how to claim your gas and repairs ... you will notice that you need to have an auto log ...

https://www.bookkeeping-essentials.com/audit-trail.html#autolog

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