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7
Apr

Tax Benefits of a Truck Lease

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Under the Canada Revenue Agency’s rules, the depreciation on a motor vehicle that you have purchased (i.e. not leased) can be netted against your income to lower the amount of taxes paid on the money you earned.

Tax Benefits of Truck Leases

Canadian tax law has a provision for deductions against income for the lessee to make taxing fair for people who are leasing their vehicle. The tax code is supposed to provide a measure of fairness, so be sure to make the most out of your deductions to save your money.

Eligible Leasing Cost

We’ll walk through the calculation that the CRA uses to calculate the eligible leasing cost.

The cost is how much you’ve been charged in the year for leasing the vehicle. If you have been leasing the car for the full year, include that in your lease cost, otherwise only include the amount that you’ve been charged for the current year. Insurance fees, tickets, maintenance costs and other charges are not included in this amount.

In addition, if someone such as an employer is reimbursing your charges, that also reduces the eligible amount.

To calculate the eligible leasing cost, you will need the following information:

  • The number of days this year that the truck was leased to you
  • The sum of the lease charges that were deducted from income in previous years
  • Reimbursements for the lease, if any
  • Interest costs
  • Manufacturer’s list price of the truck

You will use this information as an upper limit on how much of the lease cost can be deducted from your income, and this applies to self-employed drivers. There is also additional information that you’ll need, which can be found on the CRA website.

Please note that for tax purposes, your truck is not considered a passenger vehicle, but a motor vehicle. There is a difference in terms of rates used to calculate your maximum deduction. For further information, contact your local CRA office, a tax advisor, or contact us today to learn more about tax implications, rates, and other details.

Once you have the information under your belt, you will start to see the returns on working for yourself either as a self-employed driver or a sole proprietor of your own transport-based business!

If you’re interested in seeing how much your leasing expenses will be for the year, contact the Truck Loan Center for an estimate today.

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