Topic: Should I lease?

[Solstice2006]

Hey guys, need some insight on what I should do.  A new job I have pays it's employees as sub-contractors.  Basically like working from home.  I have little experience with this.  They said to save my gas receipts, internet/phone bill, many things that I could deduct come tax time. 

About 6 months ago I was considering selling the Mazda5, and getting a Mazda6.  As we don't need two vans, and the Odyssey serves my side business better.  We chose not to, as my wife was still on maternity leave.

So now I am thinking of selling the Mazda5 again.  As my wife will go back to work in December or January.  And everybody who works at my new job leases their vehicles, as you can deduct some of the payments on your taxes? 

Looking back at the offer Mazda gave me before.  A lease for a 2014 Mazda6 GS (manual and red), for 48 months, with 24k a year, was $342 a month with tax.  With a buy out of $11,267.  0% down, 0% lease rate. 

Any thoughts?  Or should I just keep the Mazda5.  I owe $7000, and 6 months ago they were offering $11,000.  So I assume it's closer to $10,000.  But still I am getting more than I owe.

[pi314]

How stable is your employment situation?
You just finished a course, and are looking at going for another job, right?

Also, what is the offer now?

[tortoise]

Will staying under the allowed km's be an issue? 

That was always the deal breaker for me and leasing.

[aquadorhj]

lease makes sense if you can write it off (as you seem to think it is, but consult with accountant to make sure)

and since you have money in the Mazda 5 and making payments on it anyway it's trading one car for another for marginal cost (which you can write off as business expense i guess?). 

you end up with new car, you are happy and therefore WE on this board is happy!!!

[Northernridge]

You should get a note from your employer indicating that you need your car for work, we've issued many such letters over the years. CRA may challenge auto expenses otherwise. If your employer ever said to CRA that you don't require a car, then you're hooped.

A good deal for employees is to be reimbursed for kms travelled for work. I think CRA allows up .56/km. This is good because it's not taxable (because you're being reimbursed not for actual expenses but a rate per km) So, if your actual cost is less than the reimbursement amount, you're further ahead. This is how my car allowance works.

Off topic a bit but if you are a sub-contractor (not an employee) and only work for this one company, chances are CRA would consider you an employee and your 'employer' would be responsible for your source deductions and you could lose some deductions because you're not a sub-contractor and rather an employee according to CRA. We've had tax/labour/legal advice on this issue a few times over the years as well. Said another way, companies can not forego the responsibilities of having employees by calling them sub-contractors.

[Solstice2006]

How stable is your employment situation?
You just finished a course, and are looking at going for another job, right?

Also, what is the offer now?

This employment situation is stable.  Yes I just finished a course.  But it's harder getting into hospitals than I thought.  As they hire within a lot.  I will keep trying, but I suspect it will be awhile.  I want to stay at this job at least 1 year as my daughter will go to school in September.  So then if I settle for a job at a walk-in clinic, then I only have to pay for day care for 1 child.  Also, it's nice to be at this job for awhile, so when applying to other jobs, there is something recent. 

As for the offer, just went now for a quick quote with no attempts on negotiating. 

For a 2015 Mazda6 GS manual, with 24k a year on a 48 month term, $300 a month.  That's with them offering me $10,000 on the Mazda5, and I owe $7000. 

And km is not an issue, it's 5km to work. 

[Snowman]

How stable is your employment situation?
You just finished a course, and are looking at going for another job, right?

Also, what is the offer now?

This employment situation is stable.  Yes I just finished a course.  But it's harder getting into hospitals than I thought.  As they hire within a lot.  I will keep trying, but I suspect it will be awhile.  I want to stay at this job at least 1 year as my daughter will go to school in September.  So then if I settle for a job at a walk-in clinic, then I only have to pay for day care for 1 child.  Also, it's nice to be at this job for awhile, so when applying to other jobs, there is something recent. 

As for the offer, just went now for a quick quote with no attempts on negotiating. 

For a 2015 Mazda6 GS manual, with 24k a year on a 48 month term, $300 a month.  That's with them offering me $10,000 on the Mazda5, and I owe $7000. 

And km is not an issue, it's 5km to work.

Do it 

[wing]

5km to work?  Walk then lol

Or ask smart electric about his car

[pi314]

  $99 / month lease and you can save thousands a year that way 

Seriously though it's not a bad option for you, but you really seem to be longing for the mazda 6 based on your posts

[Solstice2006]

$99 / month lease and you can save thousands a year that way 

Seriously though it's not a bad option for you, but you really seem to be longing for the mazda 6 based on your posts

Well it has to be manual.  I have considered the 2015 Fit, the Golf Trendline (but for a little more the Mazda6 does more things that I like), and the Passat Trendline is too much.  I am looking for $300 a month tax (with $3000 down due to the Mazda5 trade in) based on 48 months.  The Fit I find a hair too expensive new, and lacking some features for its price.  Don't like the interior of Fords, not a quality issue, just prefer it more simple.  Legacy is decent, but doesn't turn heads like the Mazda6. 

[dash]

Solstice,

Head Northernridge's advice regarding CRA. Generally, if you have only one 'employer' (source of income)  and/or  that employer manages/dictates your workload, they are considered an employer.

 T2200E form completed by employer is what is needed to offset related business expenses against income.  Note, lease write off is generally equal to business use portion. Make sure you document every business trip. Going to your workplace is not a business trip, unless you have business appointment on the way to work!

[tooscoops]

the cheapest car to drive is the one you currently own.

leasing is not my favourite... even though a lease guarantees that i see a buyer in need of a car every 3 years or so!

these days, you can write off the car even if it's not a lease. most people like it because it's more simple (write off a portion of the payment) but you can still write off the depreciation of a car used for work. generally, if you can write off the lease, you can write off the depreciation.

0% though is always appealing (unless a finance offers a better discount/rate combo)...

so for me?.. i say don't do it. i just don't see why you would considering what you drive.

[Solstice2006]

Solstice,

Head Northernridge's advice regarding CRA. Generally, if you have only one 'employer' (source of income)  and/or  that employer manages/dictates your workload, they are considered an employer.

 T2200E form completed by employer is what is needed to offset related business expenses against income.  Note, lease write off is generally equal to business use portion. Make sure you document every business trip. Going to your workplace is not a business trip, unless you have business appointment on the way to work!

Currently I have my one employer and my landscaping as a side business (not registered at this time). And the vehicle I intend to lease could be used for making some deliveries for the one employer (but they won't pay me any extra for that).  And a bit for landscaping.  I could use it for getting more contracts, collecting payments.  Keeping a log won't be a problem.  So if I register my side business, I would have more than one source of income.  Maybe that would be a better route?

[Solstice2006]

the cheapest car to drive is the one you currently own.

leasing is not my favourite... even though a lease guarantees that i see a buyer in need of a car every 3 years or so!

these days, you can write off the car even if it's not a lease. most people like it because it's more simple (write off a portion of the payment) but you can still write off the depreciation of a car used for work. generally, if you can write off the lease, you can write off the depreciation.

0% though is always appealing (unless a finance offers a better discount/rate combo)...

so for me?.. i say don't do it. i just don't see why you would considering what you drive.

Financing doesn't offer a better rate or discount in this case.  I really don't want two vans.  And it's not too often that they are willing to give more than I owe.  Last time I tried to trade in my Mazda6, they would only offer $8000, and it had 105k, and the Mazda6 was a lot more than the Mazda5 was.  So I sold it privately for $9500, and bought a Mazda5 at another dealership!

[Snowman]

Solstice,

Head Northernridge's advice regarding CRA. Generally, if you have only one 'employer' (source of income)  and/or  that employer manages/dictates your workload, they are considered an employer.

 T2200E form completed by employer is what is needed to offset related business expenses against income.  Note, lease write off is generally equal to business use portion. Make sure you document every business trip. Going to your workplace is not a business trip, unless you have business appointment on the way to work!

Currently I have my one employer and my landscaping as a side business (not registered at this time). And the vehicle I intend to lease could be used for making some deliveries for the one employer (but they won't pay me any extra for that).  And a bit for landscaping.  I could use it for getting more contracts, collecting payments.  Keeping a log won't be a problem.  So if I register my side business, I would have more than one source of income.  Maybe that would be a better route?

Yes.

[tooscoops]

the cheapest car to drive is the one you currently own.

leasing is not my favourite... even though a lease guarantees that i see a buyer in need of a car every 3 years or so!

these days, you can write off the car even if it's not a lease. most people like it because it's more simple (write off a portion of the payment) but you can still write off the depreciation of a car used for work. generally, if you can write off the lease, you can write off the depreciation.

0% though is always appealing (unless a finance offers a better discount/rate combo)...

so for me?.. i say don't do it. i just don't see why you would considering what you drive.

Financing doesn't offer a better rate or discount in this case.  I really don't want two vans.  And it's not too often that they are willing to give more than I owe.  Last time I tried to trade in my Mazda6, they would only offer $8000, and it had 105k, and the Mazda6 was a lot more than the Mazda5 was.  So I sold it privately for $9500, and bought a Mazda5 at another dealership!

the giving more than you owe part really shouldn't be a reason to get rid of it. that's just the market or more reflective of what you paid/financed. if they are giving you double that actual value of the car or something, ok... jump on it. but don't fall into the reverse of what we make fun of on here and think that somehow what you owe is what it is worth.

the lease part, i can't imagine it would be the kind of thing you will regret, so that i can get behind.

see if you can do a three year similarly priced... less risk of being stuck. but other than that... if it's what you want, i can't see it being a bad choice.

[Great_Big_Abyss]

Okay,

slightly off-topic question, but related.

My wife is a Yoga Instructor, and is a sub-contractor to a few different gyms and studios in the city.  She has two major 'employer's that she contracts out to (a few classes each, per week), and a few smaller ones that she teaches at once or twice a year.

The companies paying her do NOT deduct taxes.  WE will be responsible for paying her income tax come tax time, therefore deductions will be very important here.

1) In this case, for tax reasons, would she be considered a sub-contractor?

2) We have financed our Altima.  I would say (I will calculate it more exactly closer to tax time using mileage) that 90% of the Altima's use is driving to/from the gyms and studios where she works.  Will I be able to claim 90% of the Altima's payments against our taxes?  Can I claim gas?  Can I claim insurance?

3) Can I claim a portion of our house towards her taxes?  She does all her prep work at home.  What can I claim?  Mortgage?  House Ins?  Hydro/Water?  What is a standard percentage that gets claimed in this case?

This will be the first full year that she will have subcontracted, and she will have made above the basic personal amount, therefore we will need to start claiming items if we don't want to get nailed too badly at tax time.

Thanks in advance for any answers.

[tpl]

I think that claiming part of your house and a portion of the house expenses may not be a good idea. IIRC if you do that then when you sell you'll have to pay capital gains on part of the profit.


Sent from my iPad using Tapatalk HD

[Hannibalsmith]

Okay,

slightly off-topic question, but related.

My wife is a Yoga Instructor, and is a sub-contractor to a few different gyms and studios in the city.  She has two major 'employer's that she contracts out to (a few classes each, per week), and a few smaller ones that she teaches at once or twice a year.

The companies paying her do NOT deduct taxes.  WE will be responsible for paying her income tax come tax time, therefore deductions will be very important here.

1) In this case, for tax reasons, would she be considered a sub-contractor?

2) We have financed our Altima.  I would say (I will calculate it more exactly closer to tax time using mileage) that 90% of the Altima's use is driving to/from the gyms and studios where she works.  Will I be able to claim 90% of the Altima's payments against our taxes?  Can I claim gas?  Can I claim insurance?

3) Can I claim a portion of our house towards her taxes?  She does all her prep work at home.  What can I claim?  Mortgage?  House Ins?  Hydro/Water?  What is a standard percentage that gets claimed in this case?

This will be the first full year that she will have subcontracted, and she will have made above the basic personal amount, therefore we will need to start claiming items if we don't want to get nailed too badly at tax time.

Thanks in advance for any answers.

You probably have some room to make business related deductions. Well worth seeking out some advice from an accountant.

[EV-Light]

Okay,

slightly off-topic question, but related.

My wife is a Yoga Instructor, and is a sub-contractor to a few different gyms and studios in the city.  She has two major 'employer's that she contracts out to (a few classes each, per week), and a few smaller ones that she teaches at once or twice a year.

The companies paying her do NOT deduct taxes.  WE will be responsible for paying her income tax come tax time, therefore deductions will be very important here.

1) In this case, for tax reasons, would she be considered a sub-contractor?

2) We have financed our Altima.  I would say (I will calculate it more exactly closer to tax time using mileage) that 90% of the Altima's use is driving to/from the gyms and studios where she works.  Will I be able to claim 90% of the Altima's payments against our taxes?  Can I claim gas?  Can I claim insurance?

3) Can I claim a portion of our house towards her taxes?  She does all her prep work at home.  What can I claim?  Mortgage?  House Ins?  Hydro/Water?  What is a standard percentage that gets claimed in this case?

This will be the first full year that she will have subcontracted, and she will have made above the basic personal amount, therefore we will need to start claiming items if we don't want to get nailed too badly at tax time.

Thanks in advance for any answers.

she might be better off operating as a small business...you have to visit an accountant :-)