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(new or used, but ZEVs purchased prior to March 2, 2020 must be new
to be included as a ZEV). The prescribed amounts for
passenger vehicles
purchased or leased are:
Passenger
Vehicle Expense Limitations Before GST/HST & PST
Deduction/Threshold
2026
2025
2024
2023
2022
2001
to 2021
Loan interest per month
$350
$350
$350
$300
$300
$300
Lease cost per month
1,100
1,100
1,050
950
900
800
Capital cost maximum non-ZEV (Class 10.1)
39,000
38,000
37,000
36,000
34,000
30,000
Capital cost eligible ZEVs (Class 54)
61,000
61,000
61,000
61,000
59,000
55,000
The maximum deduction for monthly lease costs per passenger vehicle is for new leases entered into on or after January 1,
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.
The maximum cost amount for non zero-emission
passenger vehicles for capital cost allowance
(CCA) purposes is the specified threshold plus taxes less input tax
credits. If you
pay more than this, your CCA claim will still be based on only the threshold
amount plus
taxes, less input tax credits.
The maximum cost amount for eligible zero-emission passenger vehicles for
capital cost allowance purposes is the specified threshold plus taxes less input tax
credits. Eligible zero-emission passenger vehicles include plug-in
hybrids with a battery capacity of at least 7 kWh and vehicles that are
fully electric or fully powered by hydrogen.
More information re CCA and vehicles:
Passenger vehicles and motor vehicles are normally
included in CCA class 10 (30% CCA, 15% in the first year)
Passenger vehicles costing greater
than the above specified threshold are each in a separate class 10.1
(also 30% CCA, 15% in the first year, calculated on the above cost
limit).
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 above threshold also applies when calculating GST input tax credits on the purchase or lease of a
passenger vehicle.
Zero-emission vehicles - see below.
Note that motor vehicles which are not considered passenger
vehicles do not have these limitations. See the article vehicle
definitions to determine if your vehicle is a passenger vehicle or a motor
vehicle.
There are also special rules set out in the Excise Tax Act, for GST
registrants for claiming input tax credits on the purchase of passenger
vehicles. See: