My client has a proprietorship. He purchased a vehicle in 2022. The vehicle was traded in in 2023 against a leased vehicle. I will claim the sale and the offsetting recapture in 2023.
He uses his vehicle 95% in the business
What I’m not clear on is the deposit against the leased vehicle. Do I capitalize it and take CCA on this amount? I FOUND THE INFO ON THIS. Setup prepaid lease expense.
I also noticed that there is no HST on the lease payment. Why would that be?
TIA
Gerry
I usually prorate the expensing of the deposit over the length of the lease.
A vehicle lease deposit is usually made up off several things:
First payment
Permit fees
Administration fees
Registration fee
Lease reduction charge [potentially].
The lease reduction charge should be prorated over the length of the lease.
The first lease payment should have HST in it. Look for the HST number. I would claim it if the HST number is on the lease contract.
I have never seen HST on the reduction charge. Not sure why. I therefore don’t claim it. Would love to know what others have seen.