Transportation company vehicles

Accounting and Bookkeeping
1

Hello everyone! Could you please help me with the following issue:

Corporation’s business activity is transportation (private drivers). There are two vehicles that are used, but both of them are financed under OWNER’S name, not corporation’s name. Can I expense gas expenses, car insurance, auto repairs directly? Or can I only do car allowance based on CRA rates?

Thank you for your help!

2

Ugh! I hate it when business owners do this. I assume, from your question, that the company is incorporated.

  1. Easiest way is to just use the CRA km rate for this. Keep really detailed logs! Since they are a transport company, the high km could raise flags. While legal, it’s a nuisance.
  2. Best way is to transfer the ownership of the vehicles, legally, to the corporation. Then not use those vehicles at all for personal use. If they are used for personal after this, make certain to be aware of the tax laws surrounding the benefits of using a company vehicle for personal use.
4

Thank you so much for your detailed answer! I was also thinking about a way of “leasing” the vehicle from owner to the corporation, which I believe will also rise flags for CRA…

5

This, of course, is just for the corp to reimburse the EMPLOYEES for their travel expense claims to the corp. otherwise it is not allowed.
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The BEST (only?) way, of course, is for the Corporations own CPA to review the specific bookkeeping records for adequacy and legal compliance. Tax is a legal issue, so care should always be taken.

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