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Passenger Vehicle Expense Limitations
Canadian Tax and
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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
purchased or leased after 2000 (and unchanged for 2020) 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 non zero-emission
passenger vehicles 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.
maximum cost amount for eligible zero-emission passenger vehicles for
capital cost allowance purposes is $55,000 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. See below for more
information on zero-emission vehicles.
More information re CCA and vehicles:
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
new $55,000 capital cost limit for
qualifying zero-emission vehicles which would otherwise be included in class
16. The new CCA class will be class 55, and includes taxis, vehicles
acquired for the purpose of short-term renting or leasing, and heavy trucks and
tractors designed for hauling freight. The new $55,000 limit will be
reviewed annually for appropriateness.
the new CCA class for previous class 10
and 10.1 zero-emission vehicles will be class 54, for which the capital cost
limit is still $30,000.
full tax write-off in the year
qualifying zero-emission vehicles (fully electric, a plug-in hybrid with a
battery capacity of at least 15 kWh or fully powered by hydrogen) are put to
immediate expensing (100% enhanced
allowance) will apply to eligible vehicles purchased on or after March 19, 2019
and available for use before January 1, 2024. The enhanced allowance rate
will be 75% for vehicles available for use in 2024/25, and 55% for vehicles
available for use in 2026/27. CCA will be deductible on any remaining
balances in the new classes on a declining-balance basis at a rate of 30% for
class 54 and 40% for class 55.
Vehicles for which assistance is paid
under the new federal
purchase incentive announced in Budget 2019 will be ineligible for the
first-year immediate expensing.