Asked
If I am a sole proprietorship and I have a personal vehicle, can I lease that vehicle to the company? If so how does that work?
Clint’s answer
If you "are a sole proprietorship", the business taxes are calculated within your personal taxes, and not like if you owned an incorporated company that is its own entity and must file its own taxes.
Essentially leasing a vehicle for tax advantages is redundant. It would be the same as renting your house to yourself, which has no tax impact, and therefore it is a pointless exercise.
If you wanted to deduct vehicle expenses against income made within your proprietorship you would track your km driven for business purposes, as well as total km driven in the year on said vehicle. Then you would tally up your expenses (insurance, interest, fuel, licensing, maintenance and repair, depreciation etc...) and the claimable amount for deduction would be a prorated total of km driven for work/total km.
January 13, 2025
From Ask Clint: real questions from a Canadian public finance forum, answered by Clint Cole. Names are changed. This is general information, not advice for your situation, and rules and dollar figures may have changed since Clint answered. Terms