business vehicle lease in ontario - tax breaks

Hey everyone!

I am thinking about trading in my car and leasing a vehicle. I would like to put my company logo and website addy on it. Does anyone know what kind of tax breaks you get in Ontario for leasing. I heard leasing is better than financing for a company car. I tried googling it for some info, but no luck.

Any help would be great!
Thanks, M.

Check with your accountant (if you don't have one, you should). They can give you the real skinny on what is your best method.

I do have a friend that is an auditor for revenue Canada and he has told me of stories about some of the claims that people make and they ultimately disallow. In essence he says that vehicle costs can be deducted for a percentage that equals to the amount that you used the vehicle for business purposes. A recent change in the rules are that you have to create a log for when you are using the vehicle for business purposes.

But if you put logos and what not on the car couldn't you say that your driving around town to advertise?

mfreddo wrote in post #3758398
But if you put logos and what not on the car couldn't you say that your driving around town to advertise?

You can say that, but it does not mean they will allow the deduction. You have to have a business reason. Driving to the grocery store with a sign on your car is not a business reason, driving to do a shoot, that would be a business reason.

the answer depends on how much you use it for business vs. personal, how you want to expense it, and many other factor so the decision is a choice not an answer.
I have a B.Comm specializing in Accounting and actually am pursuing a CA designation so I am knowledgeable on the topic. But there are so many factors that there is no correct LEASE or BUY right answer. The choice will always depend on number crunching based on your own situation.
I would suggest talking to an accountant to help you out, but if you want to do as much yourself you will need to read on the CRA's website (Expect to spend a few evenings reading up. Topics include Capital Cost Allowance, Motor Vehicle Expenses, Leasing Costs), plus you will also want to read up and possibly download or make your own Present Value Lease vs. Buy Analysis tables.
With so many dealers offering incredibly low/0% financing on cars the decision between lease vs. buy is a tough one and leasing isn't as good from a business standpoint as it use to be.
PM me is you need any pointers on what to read up on, or need to ask a specific question.

It will only be a percentage as stated before. Unless you business can actually prove that it is a company car, i.e. courier type company, there is no way you can prove that that car is 100% company car. Hope that helps. I am also in Ontario.

Koaster

Tax lawas are not that simple...they are tricky and no matter what to get most deductions you will have to ride a GREY line...you need an accountant to walk you through the grey areas and take resposibility should things get too fuzzy with the IRS...

superdiver wrote in post #3761267
Tax lawas are not that simple...they are tricky and no matter what to get most deductions you will have to ride a GREY line...you need an accountant to walk you through the grey areas and take resposibility should things get too fuzzy with the IRS...

The OP is from Canada, so he does not have the pleasure of doing business with our wonder, kinder and gentler IRS . However, the advice is still solid.

Find a good Chartered Accountant to help you out. As they say, an ounce of prevention......

As the US counterpart (I am a CPA), good luck with your CA designation.

I used to sell cars. Yes, I'll admit it.

Leasing is the best option. Why? You only pay taxes on the depreciation. You only pay the depreciation.

Example: Buy a Toyota today and lease it. 3 years from now when the lease is up you drive to the dealer and hand it in. you have only paid the depreciation+tax and some minor fees.

example: Buy a Toyota today and finance it. 3 years form now you will have financed the entire tax burden for the MSRP and the depreciation will make it worth just under %50 of the purchase price. You will owe more to the bank than the car is worth. This is called being "upside down". Most vehicles lose more than %50 in three years - the BMW Mini and the Ford F-350 diesel are notable exceptions, but you'll still be upside down on them.

Lease new cars, buy used cars.

cosworth wrote in post #3761841
Leasing is the best option.

While agree leasing is your best options as cosworth has stated your tax deduction will be based upon the lease payments vs. the depreciation allowed on a purchased auto. However that deduction is still going to be limited on the the business use of the auto. Typically business use is determined based upon business vs. personal miles driven. And no tax agency, will allow 100% deduction of an auto lease unless it is exclusively used in the trade or business. You could have the car painted to look like a Canon L class lens and it will not make a diffrence if you use personally.

AussiePup wrote in post #3760037
You can say that, but it does not mean they will allow the deduction. You have to have a business reason. Driving to the grocery store with a sign on your car is not a business reason, driving to do a shoot, that would be a business reason.

Have you ever seen these?

Theoretically couldn't you just claim you were attempting the same thing?

mfreddo wrote in post #3778588
Have you ever seen these?

Theoretically couldn't you just claim you were attempting the same thing?

That is why you need an accountant on your side. If he is creative enough you can deduct 100% (lease payments are not 100% deductable in Ontario but when I say 100% I mean the max. allowed rather than business km's).
The CRA isn't just going to say "Sure", and that is the reason you need someone in the business to be able to tell them what they want to hear and get them to allow it.
If your vehicle is essentially a mobile advertisement, and you have the income to justify it, they will go for it.
But there are lots of rules and regulations that need to be followed so it is in your best interest to get an accountant on your side.