Selling class 10 vehicle, purchased class 10.1

[DaveinOTTAWA]

Hi, I am completely lost. I sold my class 10 vehicle on trade in for a class 10.1 in 2019.

How do I do this, considering class 10.1 is different and not many of the examples I see where its a 10 replacing a 10.

Also, to make things more complicated, the trade in was higher than the depreciated value at the end of 2018. So is that a capital gain?

Have wasted too much time on the phone with CRA all week. I got conflicting information, nobody over there was any help which surprises me because in the past I was always able to get help fast over the phone. 

 

Thanks

[Nawal]

Hi DaveinOTTAWA, 

If you are self-employed and need to report expenses for a vehicle in connection with the operation of your business, to enter your expenses, please follow this procedure:

1. On the "Left-side menu on the interview tab", select "Interview setup".

2. On the screen to your right, go to the "Self-employment" group, check the box "Self-employment business income" and then click "Next" at the bottom of the page.

3. Return to the "Left-side menu on the Interview tab" select "Self-employment income", and on the page to your right choose the option that corresponds to your situation.

4. Complete the "T2125 - Business identification" page and click "Next" at the bottom of the page.

5. On the "Income and Expenses" page, enter your information and click "Next" at the bottom of the page.

6. This will bring you to the "Motor Vehicle expenses" page, where you may choose the appropriate option.

7. Enter the information pertaining to the vehicle and choose the appropriate option from the drop-down menu for the line "Level at which the expense is claimed", choose the "Business expenses" option. However, note that you could choose another option.

8. If you have opted for a purchased vehicle and it is the same vehicle as the previous year, on the line "Opening balance of the undepreciated capital cost" enter the UCC which you will find in Area A of Form T2125 in column 10 of your tax return of the previous year.

However, if this is the first year of use of this vehicle for business purposes, do not enter an amount on this line. Go to the line "Amount of capital additions" instead and enter the fair market value (FMV) of the vehicle.

9. For a purchased vehicle, on the line "CCA class of the vehicle" select the class of your purchased vehicle from the drop-down menu. The CRA considers that a vehicle with a cost that is less than $30,000 before taxes is Class 10 and other vehicles are considered Class 10.1.

10. To determine the part of the expenses applicable to your business, enter the "Kilometres travelled for business or work" and the "Total kilometres travelled".

11. Then, enter the motor vehicle expenses you have incurred.