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Passenger Vehicle Expense Limitations
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 | |||
| Deduction/Threshold | 2023 | 2022 | 2001 to 2021 |
| Loan interest per month | $300 | $300 | $300 |
| Lease cost per month | 950 | 900 | 800 |
| Capital cost maximum non-ZEV | 36,000 | 34,000 | 30,000 |
| Capital cost eligible ZEVs | 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 thrershold 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).
- 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 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:
Input tax credits on purchase of passenger vehicles and aircraft, and
Input tax credits on motor vehicle allowances.
Capital Cost Allowance for Zero Emission Vehicles
TaxTips.ca Resources
All topics related to vehicles and business
What Vehicle Expenses Can Be Deducted By A Business?
Canada Revenue Agency (CRA) Resources
Line 22900 Employment Expenses - Capital Cost Allowance
T2 Schedule 8, Capital Cost Allowance
Revised: July 31, 2023