Income Tax Act s. 13(7)(g), s. 67.2, s. 67.3, Income
Tax Regulations R7307(1), R7307(2), R7307(3)
The Income Tax Act imposes limits on amounts than can be written off
regarding passenger vehicles. The prescribed amounts for
passenger vehicles
purchased or leased after 2000 (and unchanged for 2011) are:
maximum deduction allowed for interest on a loan to purchase a passenger
vehicle is $300 per month.
maximum deduction allowed for monthly lease costs per passenger vehicle is $800 plus GST
or HST and any applicable
PST, less any GST or HST input tax credits claimed. The
deductible lease costs are prorated if the value of the
vehicle exceeds the capital cost limit of $30,000.
maximum cost amount for capital cost allowance
(CCA) purposes is $30,000 plus taxes less input tax credits. If you
pay more than this, your CCA claim will still be based on only $30,000 plus
taxes, less input tax credits. More information re CCA:
Passenger vehicles are normally
included in CCA class 10 (30% CCA, 15% in the first year)
Passenger vehicles costing greater
than $30,000 are each in a separate class 10.1
(also 30% CCA, 15% in the first year, calculated on the above cost
limit).
A terminal
loss may not be claimed for class 10.1 vehicles.
Recapture rules do not apply to
class 10.1 vehicles.
In the year of disposal of a class 10.1 vehicle, 15% CCA may be claimed.
The $30,000 limit also applies when calculating GST input tax credits on the purchase or lease of a
passenger vehicle.
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