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Originally posted by Bingo

Does it make sense to Lease a vehicle if you are self employed .
If yes how much can you claim on the lease payment of car in your tax returns.

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It may work well for a few.

Leasing costs - Motor vehicle
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You can deduct amounts you incur to lease a motor vehicle you use to earn income.

When you use a passenger vehicle to earn income, there is a limit on the amount of the leasing costs you can deduct. You will have to calculate your eligible leasing costs.

The lease agreement for your passenger vehicle may include items such as insurance, maintenance, and taxes. In this case, include them as part of the lease charges, you pay these separately.


{where the cost of the "passenger vehicle" exceeds $20,000 or such other amount as is prescribed, the capital cost thereof shall be deemed to be $20,000 or that other prescribed amount, as the case may be. This might have changed for the year 2008.} It was the old format. You will have to contact a good tax consultant. OR Call CRA. (Canada Revenue Agency)



THERE ARE TWO CALCULATIONS THAT YOU WILL HAVE TO REMEMBER.

1) The actual cost of the vehicle and the depreciation on that cost of it.

2) The amount that was paid as a leasing cost. (Annual allowance)

They will allow which ever is lower.

There is an annual allowance.
You cannot fully deduct an eligible capital expenditure because the expenditure is considered to be capital in nature and provides a lasting economic benefit. However, you can deduct part of its cost each year. We call the amount you can deduct as your annual allowance.



They change some of these terms from time to time. Please contact a good tax consultant or Hire a Book Keeper.

H & R Block and others run a course for do it yourselfers. Costs a little for the start. It is well worth it, since you are in business. Also get a decent software that does the book keeping and at the year end also does the taxes, all by itself. It might cost you a few bucks, but it is also worth the cost.

There are a few accountants that will chime in and also will help you with some of the software available here in the market. Some come with training included. I know a few accountants there who used to sell these and train you too, a lot cheaper than the shelf cost.

Wait for others to provide you with their comments.

Freddie.