Question

2020 UCC balance $15000 in class 10.1 then purchased new car of 50000. in 2020 a car was sold for 20000 and purchased for 80000. what will be the tax implications for 2020 for these two situations?

Answer 1

For 2020:

Case 1: UCC balance $15000 in class 10.1 then purchased new car of 50000.

For Class 10.1 vehicle, CCA (Capital Cost Allowance) in the Previous Year 2019, maximum allowed is $30,000.

UCC balance is $ 15,000. Let's assume that this balance is used to purchase new car worth $ 50,000.

Taxable Amount = $35,000 [50,000 - 15,000]

Maximum deductible = $30,000 + GST

Assume GST Rate is 10% = $30,000 x 10% = 3,000

Therefore, maximum claimable = 33,000.

Note: No matter how much is the abount, maximum claimable is = $30,000 + $3,000 (GST/HST/PST). This amount ($33,000) is to be entered in Column 3 of Form T777.

Case 2: A car was sold for 20000 and purchased for 80000.

Sales price of car: $20,000

Purchase Price: $80,000

Difference Paid = $60,000

Note: This is to be entered in Column 4 of Form T777.

Rule: Lesser of

• the proceeds of disposition of the property (minus) the related outlays and expenses; and
• the capital cost of the vehicle

= Diiference or Capital Cost of Vehicle whichever is lesser.

= $60,000 or $80,000 [whichever is lower]

= $60,000.

Conlcusion: Tax implications in cases are as follows.

Case 1: Maximum Claimable = $33,000.

Case 2: Tax Payable on $60,000.