Other Questions
Hello @cparksmobiletruckrepair ,
Are you a sole proprietor or an incorporated company and are you registered for the GST?
If you are a sole proprietor, even if you are registered for GST, you cannot claim the ITC (Input Tax Credit) for GST on the purchase of a vehicle, as the vehicle is owned by yourself, an individual. As such, it would not be recorded in your business books at all. As a sole proprietor, the way you get your GST back is through your T1 personal income tax return on Form T2125, by claiming the vehicle as an asset with depreciation. You are allowed to include the entire price of the vehicle up to a maximum of $30,000 + GST, PST or HST for Class 10.1 (any vehicle classified as a passenger vehicle and costs more than $30,000 pre-tax) or Class 10 (vehicles classified as motor /passenger vehicles with a cost of less than $30,000 pre-tax). Then you slowly recover the GST you paid on that vehicle through Depreciation (or CCA - Capital Cost Allowance) as CRA calls it. There is a box you check on that form to indicate that GST is included in your opening CCA amount or not.
It should also be noted that as a sole proprietor, you cannot enter 100% of your vehicle costs into your books and claim them all in your business, ie Fuel, Maintenance, Insurance, etc.. Again, this is handled on the Form T2125 on your personal income tax return. The total vehicle expenses are entered into the T2125, and then you must enter your Total KM and the KM's you drove in the year for business purposes. Whatever percentage of the whole is then applied to your vehicle expenses and you are allowed to claim only that amount for that year. If you want to enter all your vehicle expenses into your QB business account for the sake of simplicity and tracking to get a total, you can do that but you will have to make an adjustment at the end of the year to remove the personal portion of these expenses from your books by making an entry to CR the applicable vehicle expenses and DR your Owner's Equity:Withdrawals account. Doing this will enable you to match your QB P & L to your income tax form T2124, which is a good check and balance as to what numbers you are reporting.
It is a completely different story if you are an incorporated company and are registered for the GST. If that is the case, then you can record the purchase of the vehicle in your business books and use the GST tax code on the appropriate lines. Your JE or payment to the bank would look something like this: (example is based on $30K purchase price of vehicle, with SK taxes)
Because you would be using the QB tax code for GST purchases, you would realize your refund when you file your GST remittance for the period, providing the GST you paid on business purchases (including the vehicle) are more than the GST you collect on your sales. The vehicle depreciation is then taken care of on the T2 Corporate Tax return which is where your accountant will determine the CCA for this vehicle each year.
