No matter what the salesman or leasing representative tells you, leasing does not always give you a better tax deduction than buying.
With a strictly rental lease arrangement, where the vehicle is returned at the end of the lease term, the deduction for tax purposes is the monthly lease payment, after any relevant deduction restrictions imposed by the tax act.
With a vehicle purchase, the comparative deductions are for loan interest costs and capital cost allowance calculated on the vehicle. Deduction of vehicle operating costs is not relevant, as these will be the same regardless of whether the vehicle is leased or purchased.
The tax deductions may be higher for one option in the initial years of the arrangement and lower in the later years of the arrangement.
The tax deduction for one option may also be higher than the other simply because one option is less economical than the other.
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