In order to simplify and improve business entrepreneurs , the Canada Revenue Agency ( CRA ) recently announced , by press release , the introduction of a new registry for simplified provisions on spending motor vehicles used for commercial purposes. improving and simplifying the way of doing business in Canada. This new record for a representative period will simplify record keeping , will greatly reduce the paperwork and will continue to provide reliable data for both business owners and the CRA.
Recall that at the beginning of the year, many taxpayers have received a notice from CRA asking them to justify the commercial use of their car to deduct expenses for tax purposes . For several years, the Canadian Federation of Canadian entrepreneurs (CFIB ) exerted more pressure with the CRA to simplify the administrative burdens of small businesses. Now the question is, how to establish the representative period ? Under the new measures announced, entrepreneurs must establish, first, a base period before defining their representative period , according to specific criteria.
The taxpayer has previously completed and maintained a register covering a period of 12 months which was typical for the company ( the ” base year “). The period of 12 months should not necessarily be a calendar year.
Held a record for a representative period of at least three continuous months for each year thereafter ( the period of the representative year).
The mileage and vehicle use for commercial purposes during the representative period of three months are within 10% of the corresponding figures for the same three months of the base year (the period the base year).
The calculation of the annual use of vehicle for commercial purposes in any subsequent year do not increase or decrease by more or less than 10 % compared with the base year.
If using for now calculated annually increases or decreases by more than 10 % in a subsequent year , the base year is not an appropriate indicator of the annual use of this and the taxpayers will have s To abide by the current methods , on an annual basis , or consider establishing a new base year to justify their move.
