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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
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On discussion yesterday on a Canadian buying a boat 50% his

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On discussion yesterday on a Canadian buying a boat 50% his business ( will be a portion personal use claimed as such) the other 50 % paid by private individual will be using but not for tax purposes. Can a company purchase something with private individual. Each paying 50% of expenses and insurance
Submitted: 10 months ago.
Category: Tax
Expert:  Lane replied 10 months ago.

Hi there, good to "see" you again.

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Yes, that's completely legal. But as I mentioned yesterday. The individual that is using the asset for business must first factor by his % ownership, any deductions (such as depreciation) that come FROM ownership.

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THEN must factor again by the % of time that this taxpayer uses the boat FOR business.

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On other costs (that are based on the use only) the taxpayer can deduct any costs actually paid AS LONG AS those are also factored by the % of time that the boat is used for business.

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As an example a 10,000 boat that has a useful life of 5 years would be depreciated at 2000 per year (depreciation expense) BUT because the business owner only owns 1/2 interest in the asset he will get only a 1000 deduction per year. Then FURTHER if (for the time that THIS taxpayer uses the boat), only 60% of that use is for business purposes, his depreciation deduction per year will be cut to $600.

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With other expenses, ownership is not the issue. The only issue is whether these ARE business expenses (ordinary expenses for the business he's in) and, again, where there is some personal use of the asset, those expenses would need to be allocated.

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Let take insurance for example; If insurance is 1000 for the year and he pays 500 toward that, there would be a 500 deduction if he used the boat 100% for business ... BUT again, if on 60% of his use of the boat is for business, he would only be able to deduct (.6 x 500) = $300 for the year.

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For OTHER expenses such as fuel, then he should simply track how much fuel is used for business purposes, for which HE pays, and that is ALL deductible.

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