Car Allowance question

bassACE

bassACE

Legacy Member
Hi Guys,

I'm hoping someone here has had a similar prior experience and could shine some light on this matter!

I've recently accepted a new position with another employer and part of the perks include a monthly car allowance. I'm only starting in a couple weeks so I don't know that many people within the company that I can go to with my questions.

I have gotten a little bit of info from the employer thus far, but have googled the topic myself to try to get some more information about what this usually entails. My car allowance will be 500$ a month, but I know that will be taxed - albeit at a different rate - I'm assuming a lower rate than my salary. Please correct me if I'm wrong!
I also know that, since I'm getting a monthly car allowance, this will also cover gas expenses - there will be no 0,xx$/km paid.

So, that said, do any of you know any more ins and outs to deals like this?

And, lastly, my long-shot question - Any of you think I can lease or finance a Wrangler Unlimited with the money I have to spend?!


Thanks for any input!!!
 
500$ for gaz insurence and the car payment, you can barely lease a yaris if you drive 500km per week.

How many km/week will you travel ?


Let say insurance will be 100$/month. If you work with it you are suposed to declare it and the premium is more expansive. I didn't do it when I had it but never had an accident.
Gas maybee 50$ a week if you have a compact sedan. 200$ here.
You are left with 200$ for the car. For a lease it's not that bad but you will still have to pay from your pocket if you want more than a yaris
If you want to buy a car with it, be prepared to assume the full payment of it in case you loose the allowance for whatever reason.
Do not finance a car for 84 month, thats just retarded.

As for the question, no i dont think you can finance a wrangler if you want an all expense paid car. If you dont mind paying for gas and insurence, then maybe you can but it's not a car for traveling a lot.

Thats a 35k truck before taxes, or 196$ every two weeks for 8 fucking years (96 months) and it's a 3.6 V6 that will sip a good amount of fuel.

Also you have to think that maybee gas price will go back up in the next year or so.
 
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Ton allocation pour frais de déplacement est un avantage non imposable(si elle est raisonnable) car la dépense bénéficie plus à l'employeur qu'à toi normalement.
 
You are taxed by the mileage you do.

Easy example;

You drive 50,000km a year, 25,000km of that is for work.

If every penny went to your car payment, you would be taxed normal tax rate on 50% of your car allowance, and none on the other half, as it is a work expense.

In other news, many companies can deny your choice of car based on what your job is, or the fuel economy, if they pay for gas. My father was high up at Yokohama, and a clause was his car had to be a 4 door, because you do not want managers from account crawling out the back of your sport coupe.
 
PsychoBandito said:
You are taxed by the mileage you do.

Easy example;

You drive 50,000km a year, 25,000km of that is for work.

If every penny went to your car payment, you would be taxed normal tax rate on 50% of your car allowance, and none on the other half, as it is a work expense.

In other news, many companies can deny your choice of car based on what your job is, or the fuel economy, if they pay for gas. My father was high up at Yokohama, and a clause was his car had to be a 4 door, because you do not want managers from account crawling out the back of your sport coupe.
Click to expand...

Ca c'est pour un avantage véhicule(véhicule fournie par l'employeur) ou quelqu'un qui se fait rembourser ses dépenses d'affaire, ici on parle d'une allocation
 
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Ok before the thread gets out of hand and wrong info gets thrown around.

The 500$ a month you get will be deducted as if that was added to your total salary. It will be categorized differently on your paystub but tax wise its as if that amount was added to your total.
When they tell you 500$ for Car/Gas/Insurance at the end of the year they will send you a one page document that you will file with your tax returns that proves you use your personal car (not F plated) as a means for work on the road/seeing clients.

You will then have to also fill out TP59-V for Quebec and T777 for Canada and return those with your tax return.

Those documents are what you can deduct.
How does deduction work ?
Is your car leased = .... you put the total amount of your lease for a year under the correct column (maximum lease is 800$ a month taxes included)
Is you car bought = ... You do the math (its a box you fill out in both those documents) of your cars depreciation versus your purchase price and can declare up to 10K a year of depreciation for the first 3 years you own a car

Lease is better than a finance. You can declare the lease for as long as you want (4-5 year leases no problem) where as with a car you own its only the first 3 years. So in my case 2016 is my last year I can declare my car since I own it and have declared this one two years now.

On top of that:
You put your total amount of insurance for the year
Total amount spent on gas (personal and work)
Regis
Repairs/Maintenance
Interest paid for lease or finance

After putting the total for those you will then say how many of those total KM were for work (You in theory should keep a log book of the KMs) so lets say 20K total was for work out of 30K total driven = 66% for work (dont go crazy and put more than 75%, you will get red flagged and they will audit you)

So then 66% of your Lease/Insurance/Gas/Repairs/Maintenance get slapped against your total income. Once your income drops by that amount, the extra taxes you paid will get returned to you.

Example 2014 I got 3800$ back/2015 I got 5400$ back

The 500$ they give you a month is irrelevant in all these calculations by the way because the government only looks at how much you made (income+car allownace) versus (expenses for work)

In a nutshell its that.

You can still call me if you have anymore questions. I've been on car allowances now for 4 years.
 
PsychoBandito said:
It isn't always deducted ahead though. My wife receives a flat $600.
Click to expand...

ya but her T4 will reflect it either way since her total earned income versus taxes she paid will show a gap

Once she declares her additional expenses it probably offsets the missing taxes and she still might very well receive something back, except her return will be less than someone that gets 600$-taxes on their pay
 
persianrider said:
Ok before the thread gets out of hand and wrong info gets thrown around.

The 500$ a month you get will be deducted as if that was added to your total salary. It will be categorized differently on your paystub but tax wise its as if that amount was added to your total.
When they tell you 500$ for Car/Gas/Insurance at the end of the year they will send you a one page document that you will file with your tax returns that proves you use your personal car (not F plated) as a means for work on the road/seeing clients.

You will then have to also fill out TP59-V for Quebec and T777 for Canada and return those with your tax return.

Those documents are what you can deduct.
How does deduction work ?
Is your car leased = .... you put the total amount of your lease for a year under the correct column (maximum lease is 800$ a month taxes included)
Is you car bought = ... You do the math (its a box you fill out in both those documents) of your cars depreciation versus your purchase price and can declare up to 10K a year of depreciation for the first 3 years you own a car

Lease is better than a finance. You can declare the lease for as long as you want (4-5 year leases no problem) where as with a car you own its only the first 3 years. So in my case 2016 is my last year I can declare my car since I own it and have declared this one two years now.

On top of that:
You put your total amount of insurance for the year
Total amount spent on gas (personal and work)
Regis
Repairs/Maintenance
Interest paid for lease or finance

After putting the total for those you will then say how many of those total KM were for work (You in theory should keep a log book of the KMs) so lets say 20K total was for work out of 30K total driven = 66% for work (dont go crazy and put more than 75%, you will get red flagged and they will audit you)

So then 66% of your Lease/Insurance/Gas/Repairs/Maintenance get slapped against your total income. Once your income drops by that amount, the extra taxes you paid will get returned to you.

Example 2014 I got 3800$ back/2015 I got 5400$ back

The 500$ they give you a month is irrelevant in all these calculations by the way because the government only looks at how much you made (income+car allownace) versus (expenses for work)

In a nutshell its that.

You can still call me if you have anymore questions. I've been on car allowances now for 4 years.
Click to expand...

Oui mais toi t'as pas d'allocation? Tu te fais rembourser tes dépenses c'est pas pareil. Si OP est plus avantagé à faire ca selon sa situation et qu'il procède ainsi, il devra laisser tomber son allocation(ou l'ajouter à ses revenus imposables).
 
JuTheGreat said:
Oui mais toi t'as pas d'allocation? Tu te fais rembourser tes dépenses c'est pas pareil.
Click to expand...

I get 987$ a month allowance, taxes are deducted in my case as well so I guess its around 600$ after taxes

End of the year lets say I make 80K with my car allowance included. T4 shows 80k -30k taxes that were deducted (just throwing numbers btw).
I deduct my depreciation (or lease amount if leased)+ gas + insurance + repairs and calculate lets say 10K which 70% of my KM was for work, therefore 7000$ can be deducted

My 80k becomes 73k.... I paid 30K of taxes on 73k = government owes me

this is real ballpark stuff btw
 
I get a car allowance and it's on my pay stub on a separate line but taxes as regular income.

Sent from my Nexus 6 using Tapatalk
 
Thank you all for your input. Looks like I've got a lot to process and Persian, I'll reach out to you soon!


You all helped put things into perspective and effectively managed my expectations (read: squashed them lol)

I have to admit though, gas isn't a big concern because I will be working from home and the car will only be used on customer visits. Other than work, I am a hermit that only leaves the house to go up to Saint Donat once a month or even less.

That said, the Wrangler is a poor choice no matter what, I know, and I've learned to follow my brain rather than my heart! - so I'll be following most people's advice and looking elsewhere based on fuel efficiency.


(looking at 4x4 SUVs and Pick-Ups)
 
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