I drive a personal vehicle (owned not leased) for work and have been depreciating it for a couple years on my taxes. In December, I purchased another vehicle and put the original vehicle for sale. It did not sell until february 2015. If it sold in 2014, I would have put it on as a proceed of disposition and paid recaptured depreciation on the 2014 tax return. But because it went into 2015, I wont realize that hit til 2015 I believe. My question is, Can I depreciate the vehicle I purchased to replace the first at the same time I depreciate the first vehicle? Or should I put the selling price of the first vehicle in the proceeds of disposition for the year, even though it did not sell till a month into the next tax year?
Vehicle #1 2014 opening CCA balance $8500
Vehicle #2 added in December 2014 $20,000
Vehicle #1 put for sale Dec 2014, but sold Feb 2015 for $10,000 ($1500 recaptured depreciation if put in 2014)
Can I add vehicle 2 and depreciate it for the year, while depreciating vehicle 1, then show vehicle 1 disposed of in 2015?
Thanks
Vehicle #1 was presumably used for most of 2014 and could be depreciated at $8,500 /12 x 11 = approx $2,337
Vehicle #2 depending on when in December you began using it might be depreciated at ($20,000/2) /12 x 1 x 30% = approx $250.00
You cannot depreciate both vehicles at the full depreciation for the entire year.
You can record a deemed sale of the first vehicle at December 31, as a change of use from business to personal at the UCC if you can find identical vehicles priced at the same value of $8500 give or take. This would prove market value, which is what CRA would expect you to pay if you were buying the vehicle in reality. The advantage to this would be no capital gains or as it shows on TT, a recapture. The sale would be a personal one in 2015. The disadvantage would be a repayment of any GST/HST claimed, at the difference between the GST/HST claimed on the purchase price and the GST/HST on the sale at $8500. Bear in mind, too, that if it was HST claimed on purchase, CRA will expect HST repaid on the deemed sale. This is assuming you are a GST/HST registrant.
Vehicle #1 was presumably used for most of 2014 and could be depreciated at $8,500 /12 x 11 = approx $2,337
Vehicle #2 depending on when in December you began using it might be depreciated at ($20,000/2) /12 x 1 x 30% = approx $250.00
You cannot depreciate both vehicles at the full depreciation for the entire year.
You can record a deemed sale of the first vehicle at December 31, as a change of use from business to personal at the UCC if you can find identical vehicles priced at the same value of $8500 give or take. This would prove market value, which is what CRA would expect you to pay if you were buying the vehicle in reality. The advantage to this would be no capital gains or as it shows on TT, a recapture. The sale would be a personal one in 2015. The disadvantage would be a repayment of any GST/HST claimed, at the difference between the GST/HST claimed on the purchase price and the GST/HST on the sale at $8500. Bear in mind, too, that if it was HST claimed on purchase, CRA will expect HST repaid on the deemed sale. This is assuming you are a GST/HST registrant.
Thank you. It seems that the simplest way to do this would be to end the use of the $8500 vehicle at the end of December, then add the $20,000 new vehicle for 2015 taxes. Would you agree? I will look at the other scenarios you mentioned and see how that affects things using the program. Thanks