Simon Says: Drive a Company Vehicle
Why You Should Put Your Vehicle in a Business or Corporation – And How to Do It
Disclaimer: specific to the province of Ontario.
For many business owners, using a vehicle is a regular part of operations—whether it's driving to meet clients, transporting goods, or making site visits. If your vehicle is primarily used for business purposes, you might be missing out on valuable tax advantages and liability protection by keeping it in your personal name.
In this post, we’ll explore:
• The benefits of registering your vehicle under a corporation or business
• How to transfer a personal vehicle into your business
• What to consider when buying a new or used vehicle directly through your corporation
• RIN (Registration Identification Number): what it is and why you need it
✅ Benefits of Putting a Vehicle in a Business or Corporation
1. Tax Deductions
When your corporation owns the vehicle, it may be able to deduct vehicle-related expenses such as:
• Lease payments or capital cost allowance (CCA) for purchased vehicles
• Fuel and maintenance costs
• Insurance
• Repairs and upkeep
• Interest on vehicle loans
To qualify, the vehicle must be used primarily (more than 50%) for business purposes.
2. Input Tax Credits (ITCs)
If your business is registered for GST/HST, you may be able to claim ITCs on the tax portion of eligible expenses, including a portion of the purchase price if the vehicle is bought new or used.
3. Liability Protection
Putting the vehicle in the business name can offer liability separation. If your business is incorporated and there’s an accident or legal issue involving the vehicle, it could help shield your personal assets.
4. Professional Image & Branding
For certain industries (e.g., contractors, real estate agents, delivery services), having company-branded vehicles registered under the business enhances credibility and brand visibility.
🔁 Transferring a Personally Owned Vehicle to Your Business or Corporation
If you already own a vehicle personally and it’s used primarily for business, you can sell or transfer it to your corporation. Here’s how:
1. Determine Fair Market Value (FMV):
Get an appraisal or use third-party valuation (e.g., Kelley Blue Book, Canadian Black Book).
2. Document the Sale or Transfer:
Draft a Bill of Sale from yourself to your corporation. You can sell it for the FMV or a nominal amount, but this has tax consequences.
3. Update the Vehicle Registration:
Visit a ServiceOntario or applicable registry with proof of ownership and the business’s Registration Identification Number (RIN). Pay applicable taxes (HST may be recoverable as an ITC).
4. Record the Transaction in Corporate Books:
Your accountant should reflect this transfer as an asset in the books. This is typically a non-cash journal entry (shareholder loan or capital contribution).
5. Notify Insurance:
You’ll need a new commercial auto insurance policy in the business’s name.
🚗 Purchasing a New or Used Vehicle in the Business or Corporation’s Name
Buying a vehicle directly through the business or corporation simplifies the process:
1. Apply for a RIN (if not already registered):
A RIN (Registration Identification Number) acts as the “driver’s license” for a corporation. You can get one at any Service Ontario location by submitting:
o Articles of Incorporation
o Business Number or Master Business License
o Two pieces of valid business identification
2. Choose the Vehicle & Dealer:
Negotiate the purchase under the corporation’s name. The invoice and financing (if any) should all be in the business name.
3. Register the Vehicle with the RIN:
This puts the vehicle officially under the business’s ownership.
4. Finance Options:
Financing through the corporation may require a personal guarantee, especially for newer businesses.
🚨 Things to Watch Out For
• Personal Use of Corporate Vehicle:
If there is personal use of the company vehicle, a taxable benefit (standby charge) may apply, which must be reported on your T4 and included in your income.
• Vehicle Type Matters:
Luxury vehicles may have restricted deductibility. Passenger vehicles over a certain cost ($38,000 as of 2025, for example) have limited CCA and lease expense deductions.
• Documentation Is Key:
Keep a mileage log to distinguish business vs. personal use, especially if CRA audits your vehicle expenses.
Final Thoughts
Using a vehicle for your business? Structuring ownership the right way can offer valuable tax savings and legal protection—but it needs to be done properly. Whether transferring an existing vehicle or purchasing a new one through your corporation, work with an accountant to avoid pitfalls and maximize benefits.
