Vehicles: Health>Wealth>Social life

  1. CRA’s ceiling on passenger vehicles (see your registration) = $30,000 + GST.  These limits do not apply to commercial vans/trucks/large suvs that are used 90%+ to transport goods, equipment or passengers to earn income.  These limits do not apply to commercial vans/trucks with a maximum of 3 seats used 50% to earn income.  Either an entry to back out personal use of the vehicle or a taxable benefit on the driver’s T4 will be required.
  2. CRA’s leasing ceiling are $800/month+GST, and do not apply to the aforementioned commercial vans/trucks that are used 90%+ to transport goods, equipment or passengers to earn income.  These limits do not apply to commercial vans/trucks with a maximum of 3 seats used 50% to earn income.  Either an entry to back out personal use of the vehicle or a taxable benefit on the driver’s T4 will be required.    The more a passenger vehicle is over $30k+gst (CRA’s purchase ceiling) the more you benefit from leasing.  Given that leasing has higher % and cash purchases have better discounts, probably $40k is a more practical cut off.  If you buy a $40k vehicle only $30K can be claimed and depreciated by the business.  If its over $40k then you may be better off leasing.
  3.  Ideally your transportation costs should be only 10% of your gross annual income.  Anything more will expose you to an audit risk. On top of that it will also be harder to improve your life through under-consumption and investment if you are spending too much on vehicles.
  4. As with all dilemma’s make your decision with this descending list of priorities and you can not go wrong: Health>Wealth>Social life. Keep in mind the auto industry as we know it is destined to collapse since shared (Uber), self driving cars have 10x utilization with only a fraction of the cost on individually owned cars.  In the meantime, aim to get the best deal buying a used vehicle: 3-5 years old with 80,000-112,000 km (based on Net Present Value calculations accounting for safety ratings, ongoing costs (fuel, maintenance, insurance), depreciation, resale. 
  5.  If you are doing it right, the real cost of driving should be the time wasted in the vehicle.
  6. Design your life for efficiency and spend less time commuting, and free more energy for focused skill development.
  7. Get rid of any non-corporate vehicle payments, and avoid buying vehicles with debt unless its required for your business.  If you have a mortgage and spent more than either 5% of your net worth or 20% of your gross annual income on a car = sell it.
  8. New carbon levy will be introduced effective January 1, 2017, and will apply to fuel but not to consumer electricity. Fuel cost is the single-highest operating expense a vehicle incurs.
  9. White vehicles are statistically the least involved in accidents. Silver and other light colors are next safest to white, while the darker the color the higher it is statistically involved in accidents. Black is statistically the most involved in accidents.
  10. Buckle your kids into the middle seat NOT behind another passenger if possible. If that isn’t possible buckle your child behind the lightest passenger. The number of children killed by a breaking seat back this is more than the number of people killed by Takata airbags! Good options: Steel cargo barrier. Mercedes has had no issues with seat back failure.$124-million-texas-verdict-over-seatbackfailure

Health>Wealth>Social life.

Spend your precious time optimizing the number of years you can live without earned income since there is no guarantee in any business, and even less in careers and even less in jobs.  This is largely dependent on your personal spending requirements.  You should save enough each year that you don’t have to work 1 year in the future.

If you require $40,000 each year to take care of your personal spending requirements (not including equity payments to your house, and personal investing), you need to earn at least $80,000 after-tax save to save at least $40,000 each year.  Prioritize earning more money to support your standard of living, but you must at least save at least 1 year’s living requirements each year.

Wasting an extra $40K on a car is equivalent of wasting 1 full year of your life. In the above example $40K is representative of the annual spending requirements.  Let this serve as a reminder to avoid useless material purchases.

Arguably the money you may have lost on the cars so far will save you more money than was lost if the negative energy generated by admitting to be wrong and owning up to it should is used as motivation to commit to be more antifragile

Efficient use of time and money involves strategic planning by scheduling every minute of every day, and by injecting small amounts of stress in your life – while avoiding long-term stress (depreciating assets and ongoing costs) that consume life and distract from its main focus.

Once you are financially independent (don’t have to work anymore), by all means enjoy your toys.

Vehicle Safety

Why are the Euro NCAP results for rear passengers so important?  The latest variation of the Lexus RX received (at the time of this blog posting):

  1. Top Safety Pick + from the IIHS  (Sounded great, BUT…)
  2. WEAK protection for the rear passenger from the Euro NCAP
  3. marginal protection for the driver’s leg from the Euro NCAP
  4. a relatively unimpressive 77% protection for a 36 month old child in a forward facing car seat from the Euro NCAP
  5. AND it received a reduced safety score from the NHTSA (bottom 67%)
  • In the chart listed below, the 1st and 2nd column are the Head Injury Criterion (HIC) measures which indicate likelihood of head injury arising from an impact for the rear passenger and driver respectively.
  • The fourth column is the number of cm of intrusion (crush) between the B-pillar and the centre of the seat when a 3,300lb barrier shaped like an SUV was rammed into a vehicle at 50km/hr (Side impacts are the most likely to be fatal — more space/material between your kid and the vehicle colliding into you = safest)

Personal Passenger Vehicles:

2nd row HIC 1st row HIC Sum HIC B-pillar to longitudinal centerline of driver’s seat (cm) EURO-NCAP Child Protection NHTSA Frontal
BMW X5 2015+ 26 107 133 25.0 1 5
Audi Q7 2017+ 54 65 119 27.5 0.98
Audi Q7 2007-15 59 105 164 16.5 0.8
Volvo XC90 2016+  82 233 315 26 1 5
Mazda CX-9 2017+ 98 143 241 22 0.98 5
Mercedes ML 2014-15 104 64 168 19 0.73 5
Mercedes GLK  111 73 184 24 0.8
Audi Allroad  114 234 348 13 1 5
Acura MDX 138 180 318 16.5   5
Volvo XC60  158 85 243 22 1 5
VW Touareg  161 40 201 23 0.98
Tesla Model S  212 192 404 20.5 1 5

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