Class 10 vs 10.1 Assets
Discussion:
To determine whether a vehicle is a passenger vehicle (Class 10.1) or a motor vehicle (Class 10) there are three things that have to be looked at:
1. The type of vehicle: is it a sports car, a truck, a sedan or an SUV?
2. The use: is it used to transport goods, equipment or passengers? 3. How much of that use is business-related: how much is it used for business purposes? Having a class 10 asset is better for tax purposes as it allows more deductions.
For example: A pick-up truck that costs over $30,000 and seats 1-3 people including the driver may be classified as a motor vehicle (Class 10) with no depreciation restrictions, only if it is used more than 50% of the time, in the year of purchase, for business purposes to transport goods and equipment. Whereas an SUV that seats 4-9 people including the driver may be classified as a motor vehicle (Class 10) with no depreciation restrictions only if it is used more than 90% of the time, in the year of purchase, for business purposes to transport goods or equipment.
Certain vehicles such as sports cars and sedans will be classified as a passenger vehicle irrespective of the amount of business use. So, your brand new Lexus GS 350 costing over $50,000 will be subject to the depreciation restrictions even if it is used 100% for business.
The tax rules require the taxpayer to prove their position, so it is mandatory to have a vehicle log to demonstrate business use if you are using a ratio of kilometres driven as a key argument in claiming the vehicle as a Class 10 asset.
Dawn Loeffler, (Hons), CPA, CA
BA Manager,
CPA’S
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