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.

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