Buy a Vehicle Through the Corporation or Personally?

The purchase price is only one part of the decision

Vehicle ownership affects financing, CCA, GST/HST recovery, operating costs, taxable benefits and sale proceeds. The best choice depends heavily on business versus personal kilometres.

Corporate ownership

The corporation may deduct eligible operating costs and CCA within limits and may recover part of GST/HST. Personal availability can create a standby charge and operating-cost benefit for an employee-shareholder. Accurate kilometre records are essential.

Personal ownership

The corporation may pay a reasonable per-kilometre allowance for business travel, subject to the rules. A reasonable allowance can be deductible to the corporation and non-taxable to the employee. A flat allowance or combined reimbursement may have different treatment.

Example

An owner drives 24,000 kilometres annually, of which 6,000 are business. Corporate ownership means substantial personal use and potentially significant taxable benefits. Personal ownership with a reasonable business-kilometre allowance may be simpler.

If 20,000 kilometres are genuine business travel and the vehicle is rarely available personally, corporate ownership may be more competitive. The actual purchase cost and automobile limits still matter.

Luxury and zero-emission vehicles

CCA and GST/HST limits apply to passenger vehicles, and zero-emission vehicles may have different classes or incentives. These amounts change over time, so the current limits should be confirmed before purchase.

Decision worksheet

Compare five years of financing, operating cost, tax deductions, GST/HST, taxable benefits, allowances and expected resale. Include the administrative burden and keep a daily kilometre log regardless of ownership.