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What form do I use to claim my portion of car expenses for a business with a partner.
There doesn't appear to be a form, other then the T777, that allows me to enter car expenses that I can then add to Part 7 - Other amounts deductable from your portion on the T2125 form. I am in a business with a partner each with 50% share. Do I just use the T777 even though I am not employed but self-employed?
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Self-employed
It has to be on T2125 for self-employment. There are a couple of things to consider:
1. The amount can be added on line 9270 as other expense and specify vehicle expense. It will split 50/50 the same as all other expense.
2. Should it be split 50/50. Does one partner drive more than the other partner? Is the vehicle listed under the capital asset portion of the form?
3. If the vehicle expenses do not show on the 2125, add an amount to the capital asset section to bring up the vehicle expenses, fill it in and then delete the asset information. The correct percentage of vehicle expense, based on the number of kilometers you drove are automatically booked into line 9281.
4. Both partners should be able to show the number of kilometers driven, in a log book with dates and times and purpose, or CRA may disallow the claim.
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Self-employed
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Self-employed
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If your accountant claimed the GST on your vehicle, you will be liable to re-pay the portion of GST that is equal to the GST on fair market value, if or when you close the business. The vehicle will be a deemed sale back to you due to change of use rules. GST/HST is a tricky business.
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The CCA is interesting. So I'm thinking that the accountant is basically charging the CCA cost to the partnership as a service, which would make the CCA taxable. Otherwise it would not be. It's legal cost recovery if a bit aggressive. You will need to add the CCA to your spreadsheet, as well.