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QUESTION:
I have a car deduction question.
The car I had in the first part of 2002 got wrecked in an accident I had. I had only one way insurance, I was at fault, so for this car that I paid 3500CAD when I bought I only got 250CAD after this accident.
My question is:
can I claim the 3250 difference? (for me it seems similar to repair costs, it is as if I repaired the car and sold it with the repair costs). ----------------------------
david ingram replies
This is an extremely complicated question and almost
impossible to asnwer with this information but I will try: I am assuming
that you started the year with the $3,500 car.
1. If the car was just a pleasure car, it is
not deductible in any way, shape or manner.
2. If the car was being used it in business,
it is a class 10 asset which can be depreciated at 30%. If you are still
in business and you bought another car for say $5,000, your depreciation (CCA)
schedule would be like this:
UCC start of 2002 $
3,500
Additions 2002
5,000
Disposals 2002
250
Less adjustment 2002
2,500
Available for CCA 2002 5,750
CCA (depreciation )rate
30%
Claimed 2002
1,725
Carryforward to 2003 $ 6,525
In 2003, you would claim 30% of the $6,525 figure.
If you went out of business with the loss of the car, you
would claim the $3,250 as a terminal loss on your tax return.
If you stayed in business but leased a new car, you would
claim the $3,250 as a terminal loss on your T2124 form on your T1 return.
All the above presupposes that the car was used 100% for
business. If the car is a mixed use car, you would claim the percentage
of the depreciation expense that the business use of the car represented of the
total use of the car.
Hope this helps a bit. Remember that the CEN-TA Group
provides year round tax preparation services for individuals with car
expenses.
David Ingram -
www.centa.com
the CEN-TA Group US / Canada / Mexico Income Tax and Working Visa Matters 108-100 Park Royal South West Vancouver, BC, CANADA V7T 1A2
(604) 913-9133 Fax (604) 913-9123
Cell (604) 657-8451 10 AM to 10 PM 7 days a week |
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