# Dentist - incorporated - first vehicle question



## SammyPower (Nov 10, 2018)

I want to first apologize as I can imagine the old, "lease vs purchase a vehicle" question comes up A LOT. But I think my situation is somewhat unique in that I can't find any direct info online relating to my situation.

I'll start by saying that I am going to be graduating dental school this coming year and will be "incorporated." While I would love to say that I know exactly what that means, truth be told, I have no idea. Except that almost everyone does it in my field. I will also be purchasing a practice, out of province and will be probably starting my own practice from scratch in my province of residence (or alternatively, working for someone as an associate). I will not be driving to the out of province practice; it is fly in. My question comes from the fact that I plan to buy a vehicle ASAP, once I graduate. And then the question, what should I do? What is better for me, tax wise? Buy or lease?

The vehicle will be used for both business and pleasure. If it matters, I'm looking to spend maybe $50-60,000? Not sure yet too be honest. 

I spoke to a very large accounting firm that came to our school, regarding this very question, and their answer was that whether I buy it before incorporating, or after, it won't matter because the corporation could pay for my vehicle fees after the fact anyway. Basically, their answer was buy or lease, now or later, it won't matter.

Now, I can't imagine that to be totally accurate, so I'm hoping you all can help. If you need more info, please ask :nevreness: Thanks!


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## diharv (Apr 19, 2011)

How will the vehicle be used for business ? Driving from home to the office and back does not constitute business related use of a vehicle . I have been a DMD for 27 years , incorporated for 24 and owning a designated "company car" would be a stretch at best and attract great scrutiny from the CRA . I own my vehicles personally and the only auto expense I reimburse myself for and keep a record of is miles driven to out of town continuing education courses . Be careful with the advice given by these accounting firms !


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## SammyPower (Nov 10, 2018)

diharv said:


> How will the vehicle be used for business ? Driving from home to the office and back does not constitute business related use of a vehicle . I have been a DMD for 27 years , incorporated for 24 and owning a designated "company car" would be a stretch at best and attract great scrutiny from the CRA . I own my vehicles personally and the only auto expense I reimburse myself for and keep a record of is miles driven to out of town continuing education courses . Be careful with the advice given by these accounting firms !


I'm actually (or more accurately, will be) a dental specialist so I don't know if driving to and from GP offices, etc. would constitute business use? It's a part of specialty practice to provide study clubs, lunch and learns, touch base with referrals, etc. so I guess I just assumed that would be a part of my business dealings, but I could be wrong. In addition, I will possibly have multiple locations to work from (some of which will require driving to and from).

I'm curious, do you have any recommendations for choosing an accounting firm? One of the big players in the world of health care accounting is MNP, and from what I have gathered (some of my friends are medical specialists and dental GP's and use them as well) they seem to be happy with them.


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## tdiddy (Jan 7, 2015)

I use MNP, but have been quite close to switching a few times. They do my books reasonably well and are responsive to emails and such. My main concern is that my accountant doesn't seem to know my file all that well. Repeatedly forgetting issues, not that aware of our investment situation (oh don't worry about that this won't be a factor until your over a million... um we are over a million). Essentially seems like he has too many clients on his book or something. I am not sure if this is typical of MNP, nor do I have other experience with accountants to know what to expect, I'm not exactly a big client or anything. 

For what its worth (i'm not an accountant clearly), i've been told purchasing vehicle inside company is a bit dicey, and something CRA likes to hone in on. If I drive the vehicle personally then I would have to declare all that etc. A few colleagues do this but its not worth it for me.


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## Synergy (Mar 18, 2013)

Purchasing a vehicle through a company and paying a taxable benefit doesn't seem all that dicey to me. One should be logging the business km's one way or the other. And CRA will come knocking one day.

http://madanca.com/blog/buy-vs-lease-canadian/

The above calculator may help with your buy vs lease question.

Below is an article on the subject.
http://madanca.com/blog/is-it-better-to-lease-or-buy-a-car-for-a-business-in-canada/

Pros and cons either way but I always tend to lean towards purchasing.

Good luck!


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## SammyPower (Nov 10, 2018)

tdiddy said:


> I use MNP, but have been quite close to switching a few times. They do my books reasonably well and are responsive to emails and such. My main concern is that my accountant doesn't seem to know my file all that well. Repeatedly forgetting issues, not that aware of our investment situation (oh don't worry about that this won't be a factor until your over a million... um we are over a million). Essentially seems like he has too many clients on his book or something. I am not sure if this is typical of MNP, nor do I have other experience with accountants to know what to expect, I'm not exactly a big client or anything.
> 
> For what its worth (i'm not an accountant clearly), i've been told purchasing vehicle inside company is a bit dicey, and something CRA likes to hone in on. If I drive the vehicle personally then I would have to declare all that etc. A few colleagues do this but its not worth it for me.


Thanks!

Would you recommend I look elsewhere (not MNP)?


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## SammyPower (Nov 10, 2018)

Synergy said:


> Purchasing a vehicle through a company and paying a taxable benefit doesn't seem all that dicey to me. One should be logging the business km's one way or the other. And CRA will come knocking one day.
> 
> The above calculator may help with your buy vs lease question.
> 
> ...


Thank you, I find this all so confusing to be honest...


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## diharv (Apr 19, 2011)

SammyPower said:


> I'm actually (or more accurately, will be) a dental specialist so I don't know if driving to and from GP offices, etc. would constitute business use? It's a part of specialty practice to provide study clubs, lunch and learns, touch base with referrals, etc. so I guess I just assumed that would be a part of my business dealings, but I could be wrong. In addition, I will possibly have multiple locations to work from (some of which will require driving to and from).
> 
> I'm curious, do you have any recommendations for choosing an accounting firm? One of the big players in the world of health care accounting is MNP, and from what I have gathered (some of my friends are medical specialists and dental GP's and use them as well) they seem to be happy with them.


Well , in your case it looks like you will be able to log a lot of business related kms . It is just important to keep an accurate record of all the trips and milage in a logbook. As for accounting firms , I use a private guy in a medium sized city just over an hour away . I moved to him from a dental only hotshot in a Vancouver tower who I could not even pick up the phone to talk to without the rate meter being activated . I meet with my present guy twice a year and I like the personal touch . I have colleague friend who is with MNP and seems happy . Ask everyone you know in the field and you may pick up on a commonality . There are some that cater specifically to medical/dental practitioners . Like if you are in BC , Purtzki and associates is one firm that caters to us .


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## SammyPower (Nov 10, 2018)

diharv said:


> Well , in your case it looks like you will be able to log a lot of business related kms . It is just important to keep an accurate record of all the trips and milage in a logbook. As for accounting firms , I use a private guy in a medium sized city just over an hour away . I moved to him from a dental only hotshot in a Vancouver tower who I could not even pick up the phone to talk to without the rate meter being activated . I meet with my present guy twice a year and I like the personal touch . I have colleague friend who is with MNP and seems happy . Ask everyone you know in the field and you may pick up on a commonality . There are some that cater specifically to medical/dental practitioners . Like if you are in BC , Purtzki and associates is one firm that caters to us .


Thank you, I appreciate the help.


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## ammarium (Dec 5, 2018)

In simple words....In case of buying,,capital cost is deducted..rate is 30% of depreciable amount(30,000)
In case of lease, lease rentals are deductible..

As per my understanding, You are owing Vehicle which will not be for business use but you will partially use it for business.

Your maximum business expenses would be to attend meeting,conference etc..that may be 20% or 40%. Its dosent seem major figure. (It may be...depends on amount)


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## Spudd (Oct 11, 2011)

I don't know anything about the tax side of this, but just wanted to add that you can get an app for your phone to track your mileage. There are several available. They'll automatically track all your trips, then you can categorize each trip as business or personal, and export the results to use for your taxes.


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