buy a model Y, new tax deduction rules?

[Heynow999]

I have a 2 year old model 3. I have financing on it for another ~2.5 years. I have a small business and I legitamately use it for business. Due to it be financed the write-offs are not very good. Now that the rulles have changed I am wondering if it would be better to trade in the model 3 (can I even do that?) and get a model Y that has a better tax treatment. Maybe I would come out ahead and get a newer car? I am in a high tax bracket and get killed at the end of the year. I paid over $40k in tax in 2019.

Can anyone hepl me put numbers to this question?

Thanks

 

[seangoggin]

I think the answer is no, but an account may help. I am not an account. Here is my favourite site for tax details.

TaxTips.ca - Small Business - Motor vehicle expenses

You can apply a high CCA and write off large amounts of the cost of electric vehicles for business use, but only for vehicles purchased after March 18 2019.

Here is CRA with the special CCA class, and the restrictions.

Zero-Emission Vehicles - Canada.ca

 

[Heynow999]

So that is my problem. I bought the model 3 in 2018 so it doesnt qualify for for the new rules.

My idea is trade in the 3 for a Y and get a %100 CCA up to 55K in the first year. I asked my accountant and judging by his answer I dont think he is aware of the new rules. I Then sent him a link to the new rules so ill see what he says.

 

[canadianeh]

Went through this with my accountant.

it depends on your biz structure AND income.

We ran three scenarios for me.

1) Buying through the Corp.

2) Buying personal and doing the 100 write-off.

3) Buying personally and paying mileage.

In the end, #3 beat out #2. You run into an issue if CRA designs your $80,000 Model Y is only used let's say 60% or 80% for business.

There is tricky analysis here, but it may end up costing you. Or saving you a boat load of cash, you need an accountant to run the numbers. Keep in mind anything above and beyond the $55k is a wash, often negating the write-off benefit. I think it makes most sense with the SR+

 

[mrbush22]

Went through this with my accountant.

it depends on your biz structure AND income.

We ran three scenarios for me.

1) Buying through the Corp.

2) Buying personal and doing the 100 write-off.

3) Buying personally and paying mileage.

In the end, #3 beat out #2. You run into an issue if CRA designs your $80,000 Model Y is only used let's say 60% or 80% for business.

There is tricky analysis here, but it may end up costing you. Or saving you a boat load of cash, you need an accountant to run the numbers. Keep in mind anything above and beyond the $55k is a wash, often negating the write-off benefit. I think it makes most sense with the SR+

I don’t know much about this stuff, but for #3 your expense write offs only lower your taxes owing, correct? So if your income tax was less than your car payment you’re still going to have to pay a portion out of pocket?

 

[ccudmore]

3) Buying personally and paying mileage.

One benefit of #3 is the ongoing cost of running a Tesla is significantly lower than the CRA prescribed rate of $.59/km.

 

[canadianeh]

Here is an example of some analysis my accountant did.

Keep in mind, this is different based on business structure type (corp, self-employed, etc), annual revenue, personal income etc. But we ran these three scenarios using the 100% EV Write Off Option against other options.

Can't seem to embed image, see here: imgur.com

Keep in mind, as well, this was using SR+ at 55K, everything above and beyond throws a bigger loop into things i.e. Model Y at 80K after taxes....That 25K needs to come from somewhere, not applicable to this.

So, in a corp that could be a dividend (which you would be taxed on)... could potentially be a loan, etc.

Again, lots of analysis.

It's not just as easy as saying "Hey, let's get a Tesla and a 100% write-off!"