When a Uber Driver/owner (proprietor) buys a new car to use for uber ride share, can they entitle to claim the GST paid on the new vehicle? The proprietor purchased this car (didn’t lease it) but financed it at the bank.
In the second scenario, what if they also use this car for personal use? Should they claim the GST amount according to the business use?
Normally if self employed, the vehicle must be used 90% business to claim GST/HST/QST. Otherwise it is claimed annually of the business portion of the CCA taken.
I don’t know about the other provinces, but in Quebec because of the large amount claimed, it is always audited requiring a copy of the purchase contract and a log proving the 90% use.
This client is in BC. I just finished talking to CRA’s senior agent; first, he said no. Then I explained to him that according to the CRA website, it says yes; he checked his sources and told me that yes, I am right, GST paid on the purchase of the vehicle used in a taxi or ride share business can be claimed in ITCs.
Anyone from BC wants to put some light on this topic?
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GST/HST memorandum 8.2
26. In the above example, since the registrant is an individual who uses the passenger vehicle otherwise than exclusively in commercial activities, an ITC cannot be claimed in the reporting period of the acquisition. However, in accordance with subsection 202(4), the registrant will be entitled to claim an annual ITC equal to 5/105 of the capital cost allowance (CCA) deducted in the year for income tax purposes. This is discussed later on in this memorandum.
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Even if uses 92-95% for business purposes? What if He is not claiming the CCA?
If he uses 92 - 95% business, he should be claiming CCA and 100% of the GST when purchased. At least, that is what is allowed by law. Unless Uber pays well enough that he can afford to leave that much money on the table.
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