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Can someone please explain the new CRA deduction to me?

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Im talking about this

Zero-Emission Vehicles - Canada.ca

Where you are allowed to deduct %100 of the cost up to $55,000.

So here is where im at. I have a small business and I legitimately use my car for work. I use %85 business use on my taxes. I have a 2018 model 3 so it does not qualify for this. I took a 6 year loan with 3 1/2 years left. I may be able to trade it in on a model y and break even. I am also planning on getting a cybertruck, but I am ok waiting a few years so I dont get one of the first several thousand off the line.

So would I be better off to trade in the model 3 for a Y and lease it for 3 years, then get the cybertruck when the lease is over? I dont want to discuss how much tax I paid last year, but it would be nice to have more tax deductions.
 
Im talking about this

Zero-Emission Vehicles - Canada.ca

Where you are allowed to deduct %100 of the cost up to $55,000.

So here is where im at. I have a small business and I legitimately use my car for work. I use %85 business use on my taxes. I have a 2018 model 3 so it does not qualify for this. I took a 6 year loan with 3 1/2 years left. I may be able to trade it in on a model y and break even. I am also planning on getting a cybertruck, but I am ok waiting a few years so I dont get one of the first several thousand off the line.

So would I be better off to trade in the model 3 for a Y and lease it for 3 years, then get the cybertruck when the lease is over? I dont want to discuss how much tax I paid last year, but it would be nice to have more tax deductions.
Disclaimer: I'm not an accountant. This answer is basic based on my limited understanding.

It's not a deduction per se. It means you can depreciate the cost of the vehicle in one year instead of 4 or 5 years as you would with any other capital asset. Normally with a capital asset you'd would depreciate 1/4 of the purchase price each year for four years - decreasing your taxable income by the amount of the depreciation. But with this you can decrease the taxable income by the full amount of the vehicle the year it was purchased.

The 15% that's personal use would have to still be delayed as a taxable benefit on your own personal return.

I may be out in left field on this.... I repeat I'm not an accountant. You should definitely talk to your accountant to confirm. With EVs it can be more advantageous for you to buy the car personally and have your business reimburse you at the prescribed rate for mileage.
 
My accountant applied this on my taxes last year.
I use the car for business and deducted 55,000 plus tax off my taxes in 2019,
It worked perfectly and not only did I enjoy the car but got a substantial refund due to this incentive for zero emissions vehicles.
My business partner was so impressed she just ordered a Y.
Thank you Justin Trudeau
 
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OK, does anyone know if you can say depreciate %25 each year for 4 years? It would not make sense to to take the whole deduction in one year if it pushes you into a lower tax bracket. Put another way, what you would want to do is take enough deductions to push yourself to the lowest point of the tax bracket that you are in. Then do the same thing the next year. Would that be possible? What about with a lease?
I believe the deduction is $55k plus HST? So say you are in a %40 tax bracket you would have 55,000x.13x.40%=24,860$ reduction in taxes? Does this sound right?

(I did ask my accountant about this, he said buy a big truck!)
 
OK, does anyone know if you can say depreciate %25 each year for 4 years? It would not make sense to to take the whole deduction in one year if it pushes you into a lower tax bracket. Put another way, what you would want to do is take enough deductions to push yourself to the lowest point of the tax bracket that you are in. Then do the same thing the next year. Would that be possible? What about with a lease?
I believe the deduction is $55k plus HST? So say you are in a %40 tax bracket you would have 55,000x.13x.40%=24,860$ reduction in taxes? Does this sound right?

(I did ask my accountant about this, he said buy a big truck!)
Honestly if your accountant doesn’t clearly understand Capital Cost Allowances I’d be looking for a new accountant.
 
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also, it looks like this deduction would not apply to a model y. The base MSRP has to be below $45k, so the made a goofy short range to comply with that. it seems it would not apply to a Y. could anyone above confirm if they have done this deduction with a model Y? I am seeing plenty of Y's on the road so I surely thought this was the reason.
 
also, it looks like this deduction would not apply to a model y. The base MSRP has to be below $45k, so the made a goofy short range to comply with that. it seems it would not apply to a Y. could anyone above confirm if they have done this deduction with a model Y? I am seeing plenty of Y's on the road so I surely thought this was the reason.
Totally different government incentive. That cap is for the $5000 direct federal rebate at purchase time.
 
OK, does anyone know if you can say depreciate %25 each year for 4 years? It would not make sense to to take the whole deduction in one year if it pushes you into a lower tax bracket. Put another way, what you would want to do is take enough deductions to push yourself to the lowest point of the tax bracket that you are in. Then do the same thing the next year. Would that be possible? What about with a lease?
I believe the deduction is $55k plus HST? So say you are in a %40 tax bracket you would have 55,000x.13x.40%=24,860$ reduction in taxes? Does this sound right?

(I did ask my accountant about this, he said buy a big truck!)

You are not required to claim CCA at all, in fact, this process is completely optional, and in years where your CCA exceeds your income, you can choose to claim only a portion rather than reduce your UCC with reaping the benefit of the associated CCA tax credits.

If i was in the top bracket, I would lean towards claiming only enough to reach a lower bracket, saving the remainder for next year. YMMV.

However, COVID has messed this up for a lot of people.

I bought my LR AWD in Oct 2019. I had normal business use % for the remainder of 2019 so I had a decent deduction (and just got my refund a few weeks ago - took them a long time to process).

If I had purchased my car in Jan 2020, and then had to work from home starting in March, my business % would have been much lower, and I would have chosen to take NO deduction against 2020 when business use was low, and instead leave it all for 2021 when hopefully business use was higher.

FYI - regular automobiles (class 10 or 10.1) depreciate at 30% declining balance, with a half year rule in the year of acquisition and disposal. The asset class for my 3 was 54.
 
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Im talking about this

Zero-Emission Vehicles - Canada.ca

So would I be better off to trade in the model 3 for a Y and lease it for 3 years, then get the cybertruck when the lease is over? I dont want to discuss how much tax I paid last year, but it would be nice to have more tax deductions.

Not sure if there are any incentives for this if you lease. the 100% CCA deduction is for purchased vehicles. If you lease, you may be stuck with just the $5000 incentive program.
 
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