Cars and Tax
Mar 19th 2014, 2:14 pm
#1
Every day's a school day
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Joined: Jan 2005
Location: Was Calgary back in Edmonton again !!
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Cars and Tax
I have a car that i use for work so forms part of my tax claim ie depereciation, interest on finance and running cost etc..now it looks like i will be returning to the UK for good in May..now if i hand back the car and the value of the car is less than the outstanding finance can i claim this loss on my 2014 tax return?
Mar 19th 2014, 5:56 pm
#2
Binned by Muderators
Joined: Jul 2007
Location: White Rock BC
Posts: 11,682
Re: Cars and Tax
Unfortunately not. However if the amount you get for the tax is less than the tax written down amount you could claim a terminal loss.
Mar 19th 2014, 6:39 pm
#3
Every day's a school day
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Mar 19th 2014, 7:09 pm
#4
Binned by Muderators
Joined: Jul 2007
Location: White Rock BC
Posts: 11,682
Re: Cars and Tax
For tax purposes you depreciate the car each year. The rate is 15% for the year you bought it and 30% per year afterwards on a declining balance basis. If you use your vehicle 50% for business you deduct 50% of the depreciation from your taxable income.
Say yuo paid $40,000 for the vehicle. The maximum cost you can depreciate is $30,000 + tax so in Alberta $31,500. In year one the depreciation is $4,725, in year 2 $8,032.50 so at the end of year 2 the tax written down value is $18742.50 (31500-4725-8032.50). If you sold it for $15,000 in year 3 you will have a terminal loss of $3,742.50 and yoo can deduct half of this from income. If you sold it for $20,000 you would have a recapture of $1,257.50 and have to add half of this back into income.
Say yuo paid $40,000 for the vehicle. The maximum cost you can depreciate is $30,000 + tax so in Alberta $31,500. In year one the depreciation is $4,725, in year 2 $8,032.50 so at the end of year 2 the tax written down value is $18742.50 (31500-4725-8032.50). If you sold it for $15,000 in year 3 you will have a terminal loss of $3,742.50 and yoo can deduct half of this from income. If you sold it for $20,000 you would have a recapture of $1,257.50 and have to add half of this back into income.
Mar 20th 2014, 5:48 pm
#5
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Joined: Jul 2010
Location: Calgary, Alberta
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