Automotive

Should I lease or buy a lexus RX?

  • Last Updated:
  • Jan 24th, 2013 7:20 pm
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Member
Jun 6, 2008
356 posts
135 upvotes
You can deduct your motor vehicle expenses if you meet all of the following conditions:

•You were normally required to work away from your employer's place of business or in different places. (YES - verified by employer on T2200)
•Under your contract of employment, you had to pay your own motor vehicle expenses. YES
•You did not receive a non-taxable allowance for motor vehicle expenses. Generally, an allowance is non-taxable when it is based solely on a reasonable per-kilometre rate. correct, I received a TAXABLE allowance•You keep with your records a copy of Form T2200, Declaration of Conditions of Employment, which has been completed and signed by your employer. Yes - have one every year

Sometimes, your employer will include an unreasonably low allowance as income on your T4 slip even though you do not want to claim any expenses. When this happens, have your employer complete and sign Form T2200, or get a letter from your employer stating that the allowance was unreasonably low. On line 229, deduct as an expense an amount equal to the allowance.


not quite sure how to interpret this last one- can I just enter my allowance in the box without any math ie 70% usage, or backup?
Newbie
Dec 1, 2012
47 posts
1 upvote
Lease your car... why?
- Less tax
- Maintenance free for 4 years
- Hassle free
- Every 4 years a new model of the same car you have comes into the field, so you always have a new car
- After 4 years the warranty is out, so you end up paying for maint. parts. and everything else so you end up paying a lot more..

Lease is a higher pay, but this way its hassle free in terms of maint, parts, car problems, every 4 year you get a new car, you can always transfer the lease to someone else with no worries, I just think it makes more sense in Canada especially when Cars dont have value here.. you end up losing more money if you buy it.
Deal Expert
User avatar
Jul 30, 2007
33237 posts
21168 upvotes
Toronto
OP, the % is determined based on the following when doing income tax return:

you will need to track your personal mileage and business mileage. That's why I mentioned in the earlier post to have good record keeping on a daily basis.

Keep all maintenance receipts as well.
Deal Expert
Feb 29, 2008
30106 posts
5547 upvotes
Montreal
babinni wrote: You can deduct your motor vehicle expenses if you meet all of the following conditions:

•You were normally required to work away from your employer's place of business or in different places. (YES - verified by employer on T2200)
•Under your contract of employment, you had to pay your own motor vehicle expenses. YES
•You did not receive a non-taxable allowance for motor vehicle expenses. Generally, an allowance is non-taxable when it is based solely on a reasonable per-kilometre rate. correct, I received a TAXABLE allowance•You keep with your records a copy of Form T2200, Declaration of Conditions of Employment, which has been completed and signed by your employer. Yes - have one every year

Sometimes, your employer will include an unreasonably low allowance as income on your T4 slip even though you do not want to claim any expenses. When this happens, have your employer complete and sign Form T2200, or get a letter from your employer stating that the allowance was unreasonably low. On line 229, deduct as an expense an amount equal to the allowance.


not quite sure how to interpret this last one- can I just enter my allowance in the box without any math ie 70% usage, or backup?
In this case, a reasonable taxable car allowance is just treated as added income. In this case, which seems yours, your expenses are deductible using the proration formula, but you MUST add 12000$ to your income annually. You need to carefully do the math to see if a non taxable per km allowance would be more tax efficient. Under this scenario, since your allowance is fixed, you want to maximize your deduction. My suggestion is to lease the car, minimize downpayment to get as close to 800$ a month, than buyout the car at the end of the lease, and claim the CCA on the residual value for the next few years.

If you read French, this is a good read:

http://gasconca.com/automobiles.html

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