Jill asked:

My husband is going to buy a new truck and contract the truck out to his current employer. Should my husband just get paid the amount the employer pays him per hour for the truck on his pay cheque?

Or should my husband set up a business and contract his truck out that way, and invoice the employer. He is not contracting himself out, he is still an employee. Which way is better?

Also can he get tax deductions for vehicle use even if he doesn't set it up as a separate business?

John R Mott answered:

I do not recommend running everything though your husband's pay cheque, because an employee is not permitted to claim depreciation on a truck.

It is not necessary to register a business, per se, but your husband should invoice his employer separately for the truck rental; and the related income and expenses (including depreciation) should be reported on your husband's tax return as business income.

If the annual rent is expected to exceed $30,000, your husband will be required to register for the GST and collect GST on the rent.

About the author

John Mott is a chartered accountant and tax specialist with a private practice in mid-town Toronto. He provides tax, accounting and advisory services to individuals and small businesses. He may be visited online at: johnmott.com.

 
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