Using percentage of cost as expense?

[Edward Doolittle]

On 17 February 2015 at 08:43, Michael Hendry <hendry.michael at gmail.com>
wrote:

> On 17 Feb 2015, at 13:02, W Pawlowski <pawlowski.w at gmail.com> wrote:
>
> > Because the car is used for business 90% off the time I am allowed to
> use 90% of automotive expenses as deduction. In the past my accountant used
> to calculate that percentage at the end of the year for income tax
> calculation but now I also have to remit HST on quarterly basis so I
> thought it would be easier to do this on the fly.

> All my automotive expenses would be treated this way: gas, repairs, etc.
>


> I don’t know about HST - is it something like Value Added Tax in Europe?
>

Yes: GST (goods and services tax) was partly modelled after VAT, and HST
(harmonized sales tax) is more or less GST + PST (provincial sales tax).


> This makes it more complicated, because your service station presumably
> charges HST on materials, parts and labour, and if you’re being charged
> this tax in the course of your business you can probably reclaim it before
> assessing your profits.
>
> I think you’d be best to accumulate motoring expenses in a single account,
> and produce a quarterly statement with the 90/10 split so that you can
> calculate your HST liabiity. I can see that there might be circumstances
> where a tax authority might query some aspect of your expenditure, such as
> a nice paint job and a new engine put in just before you sell the vehicle
> at a tidy profit...
>

It's probably more work to figure out the 90/10 split when the transactions
are entered rather than quarterly, but it can be done.

We had a similar question in the list recently, and what I suggested is
something like this:

Cr. Assets:Cash (or liabilities credit card or whatever you use to pay) $100
Dr. Expenses:Vehicle:Business 0.90*$100
Dr. Expenses:Vehicle:Personal whatever is left over.

GnuCash will do the arithmetic for you and will put 90% of the expense in
the Business account, and will subtract $100 - 0.90*$100 to calculate what
is left over (which may not be exactly 10% of the expense due to rounding
errors). I think there's no way around copying the result of the
subtraction from one line to another, though, and you have to enter the
cost twice (once when you pay and once when you calculate the expense).

I think I would rather enter a transaction like that occasionally rather
than each transaction, shifting the expense out of your Expenses:Vehicle
account and into Expenses:Vehicle:Business and Expenses:Vehicle:Personal,
but doing it for every transaction would certainly give more up-to-date
information.

> > On 17 Feb 2015, at 01:43, W Pawlowski <pawlowski.w at gmail.com <mailto:
> pawlowski.w at gmail.com>> wrote:
> > >
> > > I am one man show so I am using my personal car for business.
> > > Lets say that 90% of use is for business and 10% is for personal use.
> > > Is there a way in GnuCash to have the automotive expense account
> calculate
> > > the percentage automatically and assign 90% of what ever is entered
> into
> > > this account as expense or would I have to do it manually every time I
> > > enter my expenses?
> > > Thank you.


-- 
Edward Doolittle
Associate Professor of Mathematics
First Nations University of Canada
1 First Nations Way, Regina SK S4S 7K2

« Toutes les fois que je donne une place vacante, je fais cent mécontents
et un ingrat. »
-- Louis XIV, dans Voltaire, Le Siècle de Louis XIV, Chap. XXVI