There is a recent CRA audit project targeting corporations who made motor vehicle purchases. The CRA is requesting documentation such as purchase invoices, and the percentages of business and personal use of the vehicles. There are many different angles the CRA can be using this information. First, they are verifying that the vehicle has been properly categorized for tax depreciation purposes in class 10. If a vehicle costs over $30,000, with a few exceptions, they should generally be categorized in another tax class that has stricter depreciation limits. Secondly, the classification is also important for determining how much GST/HST input tax credits can be claimed. Thirdly, personal use of the vehicle also has an impact on the GST/HST input tax credits as well as creating personal taxable benefits that need to be reported. Contact your Padgett office if you’ve received this type of information request, or to review how the tax rules for motor vehicles can apply to you.
CRA Verifying Motor Vehicle Purchases
About the Author: Gerald Hunt
After graduating from the University of Calgary with a Bachelor of Science degree in Computer Science, Gerald joined KPMG (Formerly Thorne Riddell) as a Computer Accounting Customer Service representative. In this position, Gerald installed accounting systems in over 200 different small to medium sized companies over a 6 year span. In 1989, Gerald left KPMG to continue to work with small business clients in his own corporation installing computer accounting systems. While in this role, he was engaged by the DeVry Institute of Technology in Calgary to teach various courses. In time, Gerald moved up through the ranks of DeVry until he attained the position of Director of Finance for the Calgary Campus. He also acquired his Masters of Business Administration from City University of Seattle, Washington in 2001. Gerald’s career has always been focused on small business, accounting and education.
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