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Receiving a Tax return

Expert: John R Mott

Noah asked:

I need help understanding lease write offs and how it will affects my tax return.

For Example: I earn $50,000 per yr in my career and have a small business (sole proprietorship) that I earn $2,000 per yr. If I lease a vehicle under my business that costs me $1000 per month I understand I can write off that expense. Therefore my taxable income is reduced to $40,000.

Given this basic example approximately how much tax would I get back (or what I really want to know is what is the "real" cost to me for the leased vehicle).

John R Mott answered:

The combined federal and provincial tax rate on taxable income between $36,000 and $72,000 is 33 per cent.

This means that a deduction of $12,000 will save tax of about $4,000. This assumes of course that the auto is used exclusively for business purposes. If the auto is used 50 per cent business and 50 per cent for personal use, then the deduction is $6,000 and the tax saved is $2,000.

About the author

John Mott is a chartered accountant and tax specialist with a private practice in mid-town Toronto. He provides tax, accounting and advisory services to individuals and small businesses. He may be visited online at:

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