When it comes to claiming automobile expenses personally vs corporately, many real estate investors, medical professionals, and business owners assume there’s a clear-cut best choice. The reality? It depends. If you own a car through your corporation, you may face tax risks and added complexity. If you own the vehicle personally and charge the corporation for business kilometers, you might come out ahead. In this post, I’ll explain the key considerations so you can make the best decision for your situation. And, I’ll reveal what I do with my own automobile expenses!
Video Transcript: Claiming automobile expenses personally vs corporately
PTo claim your automobile expenses personally or corporately, it’s a dilemma many of us face, and there’s unfortunately not what I would call a really simple answer. It can actually take quite a bit of time to go through the rigorous calculations involved, particularly when we add in: Should we lease? Should we own? Should we do this? Should we do that?
Instead, I’ll provide a couple of quick comments.
One is to say I do not believe that there’s a universally better solution for simply leasing the vehicle. In most cases, certainly not all, I find it better for an individual, a person, to own or lease their vehicle and then charge their corporation for the business kilometers that are being driven.
In turn, the individual receives a tax-free allowance from the corporation as compared to dealing with the automobile benefits, standby charges, and quite frankly, just the red flag for Revenue Canada for a vehicle that’s owned or operated through the corporation.
Other factors to consider as part of the decisions with respect to your automobile: Do you mind driving an older vehicle? Do you mind buying used? How important is it for you to be driving a newer vehicle every three-ish years, for example? These are all additional factors that are going to come into play with respect to what’s best for you from a tax perspective in deducting your automobile expenditures.
For what it’s worth, I tend to own my vehicles personally. I’ve never leased, and I don’t mind driving them for a while. If I thought there was an overwhelming tax advantage to do something different, believe me, I will have in the future and in the past.
Again, there’s a variety of exceptions. Talk with your advisor, but do not accept the concept that there’s absolutely, positively a universal best solution.
I’m George Dube, saving the world from tax, one bow tie at a time®.
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Resources
For additional resources related to how to maximize tax deductions, see:
- 2025 tax season tips: How to save more this year
- Maximize tax savings with loss harvesting
- Deducting interest expenses: The most missed tax deduction
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Remember – circumstances are unique! This information is summary in nature. Seek out advice from your tax advisor about your specific situation.
