In the vast majority of cases, it’s better to buy a vehicle personally, then charge the company for your business use, by the kilometre. (For more details on the charges, you can see Counting Your pennies…it still matters with your automobile). The primary problem with owning or leasing the vehicle in the company is that you will, in many cases, be personally charged a tax amount equal to about 24% of the value of the vehicle, as if you received a salary. Plus you are being charged for every personal kilometre you drive if you own the vehicle in the company. Depending on someone’s situation, in many cases this can result in effectively paying for the vehicle twice.
Further, the higher the original price of the vehicle, if it’s above $30,000 before taxes, additional restrictions exist on the corporate side. Most people find if they put a fair number of kilometres on the vehicle, the kilometre allowance method is superior.
Many exceptions and calculations exist surrounding vehicles and tax deductions for business use, but for what it is worth, I have always bought a vehicle personally and then charged the company for my business use of the vehicle.
George E. Dube, CPA, CA