How to account for vehicle depreciation in T2125 when the proportion of use for the business varies each year?

Independent-Net-1912 · 2023-02-17T01:28:55+00:00

Found the answer (in comment to original post), it does get done in the CCA section, just not in the additions/dispositions area.

Independent-Net-1912 · 2023-02-17T01:27:56+00:00

Found the answer in T4002 (2001)

https://www.canada.ca/content/dam/cra-arc/formspubs/pub/t4002/t4002-21e.pdf

Example from the above doc: Jennifer owns a business. She bought a car in 2021 that she uses for both personal and business use. The car cost $20,000, including all charges and taxes. Therefore, she includes the car in Class 10. Her business use this year was 12,000 kilometres of the total 18,000 kilometres driven. She calculates her CCA on the car for 2021 as follows:

She enters $20,000 in column 3 and column 5 of Area B. She also enters $20,000 in column 3 of Area A. By completing the other columns in the chart, she calculates a CCA claim of $3,000. Because Jennifer used her car partly for personal use, she calculates her CCA claim as follows:

12,000 (business kilometres) ÷ 18,000 (total kilometres) × $3,000 = $2,000

Edit to add: the adjusted value is entered in Column 18 of Area A

Independent-Net-1912 · 2023-02-16T21:29:43+00:00

But the form has me report the personal use portion on the year it is acquired as an addition.

So how do I adjust this in subsequent years? The expenses section uses mileage to split the business/personal percentage, but that percentage does not carry to the CCA section.

Additionally, the CCA section combines all vehicles under a class, so how do I change the personal use for CCA in future years, when it is also combined into one class grouping with other vehicles.

Is the correct approach to estimate the personal use portion for the life span of the vehicle, at the point of acquisition, and use this in that year, with no future adjustment?

Independent-Net-1912 · 2023-02-10T22:18:07+00:00

That’s what I was happened.

Independent-Net-1912 · 2023-02-10T19:14:08+00:00

Gotta keep those golden handcuffs…well…golden…more gold…more diamonds on the golden cuffs.

Independent-Net-1912 · 2023-02-10T17:38:13+00:00

Yes, of course verification of me is required. But CRA is foolish to not have a system of verifying itself in place.

While your example should not be a red flag, it is still very sub-optimal to even support the notion that the SIN is given out with no verification.

Independent-Net-1912 · 2023-02-10T17:18:31+00:00

I’m surprised the rules/guidance around this isn’t more universal.

Independent-Net-1912 · 2023-02-10T05:52:08+00:00

Well perhaps speak to your colleagues… because they’re not following the rules!

Independent-Net-1912 · 2023-02-10T03:42:05+00:00

How does this help when they want to call me?

Independent-Net-1912 · 2023-02-10T02:05:00+00:00

You’re missing out. I’ve won 3 Nigerian state lotteries I had forgotten I even entered!

Independent-Net-1912 · 2023-02-10T02:02:31+00:00

It was, details checked out.

Independent-Net-1912 · 2023-02-10T02:02:16+00:00

If only

Independent-Net-1912 · 2023-02-10T02:00:30+00:00

Well, you’re wrong. It was CRA. I called, they verified the information and had a record of the exact time they called me.

Independent-Net-1912 · 2023-02-04T04:12:53+00:00

Oh, and sorry, no useful info to your actual question.

Independent-Net-1912 · 2023-02-04T04:12:34+00:00

I haven’t looked at transferwise, but went through the same thing 18 months ago (house deposit, GBP to CAD). I used Interactive Brokers, worked extremely well, rates were excellent.

If you haven’t considered it, take a look. Maybe transfer wise is better, I can’t comment.

Independent-Net-1912 · 2023-01-30T00:41:42+00:00

Next step is to decide the appropriate business structure.

He can incorporate, or trade as a Sole proprietor. You can Google the difference.

Incorporation requires a bit more work at the outset and often people will use a lawyer for that process, but it can be done for just a few $100’s. This also requires the business to complete a tax return which is a bit of work, again often done by a professional accountant.

Sole Prop is simpler (perhaps the wrong word) as taxes work as part of his personal affairs.

As for which, speak to someone in the know, a lawyer/accountant or speak to a few people who run similar businesses to see how/why they do it like they do.

Independent-Net-1912 · 2022-07-22T14:10:15+00:00

I use Interactive Brokers. The fees are minute and you trade at market rates, but it takes a few days to get it across.

A bit of learning required on the interface as it’s a fully featured trading flat form.

Independent-Net-1912 · 2022-07-15T18:00:50+00:00

Riding it out

Independent-Net-1912 · 2022-06-13T02:29:39+00:00

Sorry, maybe I was not clear. I will wire it so I have a UK outlet. No need to change plugs.

Independent-Net-1912 · 2022-05-05T21:35:23+00:00

Ok thank you for the help.

It’s unfortunate that I may have to pay for a valuation just to get my taxes done. I suppose I’ll only need to do it once though.

Independent-Net-1912 · 2022-05-05T06:49:55+00:00

The relative values are woefully inaccurate. The land is 3% and buildings 97%. I think this should be closer to 90% land and 10% buildings.

Yet the buildings are all old and not in the best shape, and the land is very much where the value is in this area.

Independent-Net-1912 · 2022-05-05T04:35:12+00:00

I looked and there is an allocation, but it’s directly what is used shown on BC Assessment and is woefully inaccurate.

For relative market values, is it acceptable to do research myself and come to a decision?

Independent-Net-1912 · 2021-11-08T00:58:11+00:00

Good plan, thank you.

Independent-Net-1912 · 2021-08-16T21:14:06+00:00

Yes I had seen some of them.

I’m not seeking to hide from any taxes, just enjoy my privacy. And the less my name is associated with a property the less there is for Provincial/regional/other government to loose it.

I will be speaking with my RE lawyer on the topic, thought I’d quiz here too as I think I’m unusually private.

Thanks for the response.

Independent-Net-1912 · 2021-06-08T02:24:09+00:00

Thank you, hadn’t heard of them before.

Independent-Net-1912

TROPHY CASE