How do I claim self employed vehicle expenses, when the vehicle is registered to my wife

[TurboTaxLise · Accepted solution]

Updated answer(1/21/2019): As per poster an.absurdly.long, in the additional answers has clearly stated. Thank you for the information. I did my own research after reading your comment, I must agree.

Therefore, I will revise my previous answer to this:

If you would like to claim CCA on a vehicle that is not in your name, “you would need to prove that you are the "beneficial owner" who uses and pays for the said vehicle.” In addition, keep any receipts or slips that may support this for your records.

To get there – under the Self-Employment tab - after finishing your T2125, the very next screen will be Motor Vehicle Expenses and this is where you will enter these amounts, as well as your CCA. Please see attached screenshots.

[an-absurdly-long]

(I apologize in advance for the long answer, but I feel the need to include some specific details here in order to be as clear as possible regarding my understanding of this situation.)

I have been doing some research regarding this situation and have come across something referred to as "beneficial ownership".

The technical interpretation that is of most relevance is E2005-0122211E5, which is specifically regarding the question of claiming vehicle expenses (including CCA) when legal ownership of the vehicle is in the name of a spouse, but the vehicle is being used for business purposes by the other individual whom is not the legal owner.

Based on that technical interpretation, it seems like you may also be able to claim CCA on the cost of the vehicle, assuming that you were the one who incurred the expense (This may differ depending on whether the vehicle was bought, leased, or financed).

I have been having a difficult time finding a 100% definitive answer regarding this issue, but one of the most relevant pieces of information regarding "beneficial ownership" can be found in the "Income Tax Folio S3-F4-C1, General Discussion of Capital Cost Allowance" publication on the CRA website:

https://www.canada.ca/en/revenue-agency/services/tax/technical-information/income-tax/income-tax-fol...

Under the section of Ownership (1.22) it states that "A taxpayer does not need to hold legal title to a property in order to claim CCA. CCA may be claimed by the beneficial owner of a property if that person has all the incidents of title, such as possession, use and risk."

This appears to be the same rule used in technical interpretation E2005-0122211E5, which specifically refers to vehicles.

That being the case, it would appear that as long as you have physical possession of the vehicle (not including legal ownership), and you are the one who uses it and incurs expenses related to the business use of the vehicle (including the purchase price), then you should technically be able to claim CCA for the depreciation of the vehicle based on the percentage that the vehicle is used for business purposes.

Please feel free to correct me if this is not the case, but based on this information from the CRA, it seems to indicate that you do not need to be the legal owner of a vehicle to claim CCA. You would just need to be able to prove that you are the "beneficial owner" who uses and pays for said vehicle.