Automotive

Electric vehicle "loophole" (taxes)

  • Last Updated:
  • Jan 20th, 2020 9:01 am
[OP]
Deal Addict
Nov 10, 2018
2627 posts
2680 upvotes

Electric vehicle "loophole" (taxes)

I don't own an electric vehicle and what dawned on me is something that is perfectly legitimate although it's probably a result of the CRA not catching up to modern times.

This applies to anyone who is 1) self employed or 2) get a T2200 from work (to write off employment expenses).

So, if you fit any of these two profiles, today, you get to write off either 1) your home office expenses (a portion of home office square footage/total sq footage of your residence) or 2) your automobile expenses (business mileage/total mileage) or 3) both.

So say you own an electric car and you charge it from home. You get to write off your home electricity costs (again, portion of home office sq ft/total sq ft). Now, where life becomes interesting is say you only "drive" 10% of your car for work so if you owned a gas powered vehicle you only get to write off 10% of your gas costs, but now, if you owned an electric car, you get to write off ALL of your electricity bill (again, home office sq footage/total square footage) as a function of the size of your home office.

So say your home office is 20% of your total home size (say if you live in an apartment), but you only drive 10% of the time for business, there is no "way" to account for this under the Income Tax Act because if you follow the letter of the Act then you literally write off the 20% due to the size of your home office.

Profit?

I mean, the Act here has always been loose in application, because say your home office is 20% of the size of your home but you have a swimming pool that utilizes a large chunk of gas/electricity, then you're still writing off your total home electricity/gas bill (relative to size of office) I guess?
For legal topics and discussions, the opinion, guidance, and thoughts provided are my own and are not considered to be legal advice, in any manner.
33 replies
Deal Addict
Jan 17, 2009
1801 posts
1698 upvotes
Toronto, Ontario
Generally i've noticed with CRA is if you get greedy you get audited. Hope you saved every single receipt lol.
Deal Guru
Jan 15, 2006
13289 posts
9961 upvotes
Richmond Hill
Been doing this for the past few years already LOL
Deal Addict
Sep 6, 2017
1732 posts
901 upvotes
Ecsta wrote: Generally i've noticed with CRA is if you get greedy you get audited. Hope you saved every single receipt lol.
EP32k2 wrote: Been doing this for the past few years already LOL
In for 10.
Deal Guru
Jan 15, 2006
13289 posts
9961 upvotes
Richmond Hill
Meh as long as you can justify your write-offs to the CRA it’s fine. But yes the greedy idiots will eventually get caught.
Deal Addict
Mar 3, 2018
1209 posts
943 upvotes
GTA
If the % of the business use of the car is higher then your % use of your home then this works against you. Using a higher % of your car for business use is the more likely scenario.
[OP]
Deal Addict
Nov 10, 2018
2627 posts
2680 upvotes
DaveTheDude wrote: If the % of the business use of the car is higher then your % use of your home then this works against you. Using a higher % of your car for business use is the more likely scenario.
Yes, you're right however I would most certainly think people generally have a relatively lower % of business use for a traditional car. Why? Commute to/from work doesn't count, neither does taking the kids to/from school/sports activities, as business mileage. I would suspect most people have a fairly low percentage of business use but I'm merely guessing.
For legal topics and discussions, the opinion, guidance, and thoughts provided are my own and are not considered to be legal advice, in any manner.
Banned
Jan 15, 2020
62 posts
21 upvotes
Nothing to do electric car, you can write off either gas fuel or electric charge as long as your mileage is justifiable.

But yes the lucrative part of self employments come in form of hidden revenue and unjustifiable expenses write off. That already big enough without ev.
Deal Addict
Mar 3, 2018
1209 posts
943 upvotes
GTA
angryaudifanatic wrote: Yes, you're right however I would most certainly think people generally have a relatively lower % of business use for a traditional car. Why? Commute to/from work doesn't count, neither does taking the kids to/from school/sports activities, as business mileage. I would suspect most people have a fairly low percentage of business use but I'm merely guessing.
This will vary of course but most auto expense claims I’ve seen have been at least 50% for business use. Some even try 90%. While home expenses are usually between 5% and 20% use. It is easier to fudge a travel log then to grossly overstate sq. ft. use that can be easily verified.
[OP]
Deal Addict
Nov 10, 2018
2627 posts
2680 upvotes
DaveTheDude wrote: This will vary of course but most auto expense claims I’ve seen have been at least 50% for business use. Some even try 90%. While home expenses are usually between 5% and 20% use. It is easier to fudge a travel log then to grossly overstate sq. ft. use that can be easily verified.
Yeah I'm in the 90% range for my business vehicle which has caused the CRA to question me but then I point to my other car which I use for personal. That shuts them up quick. :)
For legal topics and discussions, the opinion, guidance, and thoughts provided are my own and are not considered to be legal advice, in any manner.
Deal Addict
May 30, 2012
3621 posts
913 upvotes
Montreal
How is this a loophole?
You accountant should be able to tell you exactly how to do it ..
Penalty Box
User avatar
Apr 21, 2004
51752 posts
16259 upvotes
So we save on most of the electricity, what about water bills with fuel cell vehicle?
Deal Guru
User avatar
Feb 11, 2007
13063 posts
13223 upvotes
Oakville
alanbrenton wrote: So we save on most of the electricity, what about water bills with fuel cell vehicle?
Fuel cells don't consume water. They do produce water, are you considering harnessing that? ICE also produce water, btw.
Penalty Box
User avatar
Apr 21, 2004
51752 posts
16259 upvotes
engineered wrote: Fuel cells don't consume water. They do produce water, are you considering harnessing that? ICE also produce water, btw.
You never read a joke before? Lighten up. It's 2020. :)
Deal Guru
User avatar
Feb 11, 2007
13063 posts
13223 upvotes
Oakville
alanbrenton wrote: You never read a joke before? Lighten up. It's 2020. :)
That could've been a totally legit question from some posters here. A "/s" or ":)" at the end would indicate humour.

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