rickholio

There are advantages to having a corporate vehicle. For one, any expenses in maintaining the vehicle are direct expenses against corporate income. In essense, you get your gas, tune ups, insurance etc "tax free". In my province, my company pays 18.1% combined federal and provincal business tax... so, from one perspective, having a corporate vehicle means getting an effective 18.1% discount on gas, or repairs, etc.

Of course, unless that vehicle is used primarily for business (50% or more), you have to pay a tax on the usage of that vehicle as an individual... what is known as a "taxable benefit". The benefit is derived from the book value of the vehicle WHEN IT WAS PURCHASED BY THE COMPANY, and is paid yearly and prorated by the amount of personal use vs. corporate use (if it's more than 50% personal, you pay 100% of the taxable benefit). Because the initial purchase book value never changes, as time goes by it makes less and less sense to maintain that current vehicle. This is why leasing a car is so popular an option for cdn business: You're going to have to pay the taxable benefit anyways, and it's still not going to end up as 'your personal vehicle' in the end, why not lease?

Having run the numbers, having a vehicle in the business name, even if its intended primarily for personal use, usually pays off in direct expense write-off vs. taxable benefit paid out. Talk to your accountant about the relative benefits of ownership vs. leasing though, as that varies based on the model, your usage, and what your ultimate plans are for the vehicle in question.

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