For income tax purposes, there are limitations on the expenses that can be claimed for a passenger vehicle.
A passenger vehicle is a motor vehicle designed to carry people on highways and streets, and can carry a driver and no more than 8 passengers. Some motor vehicles are NOT considered passenger vehicles, and do not have the cost limitations of passenger vehicles. See also the CRA web page What is an automobile?
The following table is from the CRA publication T4002 Business and Professional Income (see link at bottom of page), and illustrates when a motor vehicle is or is not a passenger vehicle:
| Vehicle Definitions | |||
| Type of Vehicle | Seating (includes driver) |
Business use in year bought or leased? (2) |
Vehicle definition (1) |
| Coupe, sedan, station wagon, sports car, or luxury car | 1 to 9 | 1% to 100% | passenger |
| Pickup truck used to transport goods or equipment in the course of business | 1 to 3 | more than 50% | motor |
| Pickup truck (other than above)* | 1 to 3 | 1% to 100% | passenger |
| Pickup truck with extended cab used to transport goods, equipment, or passengers in the course of business | 4 to 9 | 90% or more | motor |
| Pickup truck with extended cab (other than above)* | 4 to 9 | 1% to 100% | passenger |
| Sport utility used to transport goods, equipment, or passengers in the course of business | 4 to 9 | 90% or more | motor |
| Sport utility (other than above) | 4 to 9 | 1% to 100% | passenger |
| Van or minivan used to transport goods or equipment in the course of business | 1 to 3 | more than 50% | motor |
| Van or minivan (other than above) | 1 to 3 | 1% to 100% | passenger |
| Van or minivan used to transport goods, equipment or passengers in the course of business | 4 to 9 | 90% or more | motor |
| Van or minivan (other than above) | 4 to 9 | 1% to 100% | passenger |
| *A vehicle in this category that is used more than 50% to transport goods, equipment, or passengers while earning or producing income at a remote work location or at a special work site that is at least 30 kilometres from the nearest community having a population of 40,000 persons is considered a motor vehicle, not a passenger vehicle. | |||
(1) A "passenger vehicle" generally means an automobile purchased or leased after June 17, 1987.
(2) Notes re "more than 50%" and "90% or more":- The Income Tax Act does not impose the 50% limit, but instead uses the word "primarily". Canada Revenue Agency uses "more than 50%" as the guideline for "primarily".
- The Income Tax Act does not impose the 90% limit, but instead uses the words "substantially all". Canada Revenue Agency uses "90% or more" as the guideline for "substantially all".
Automobiles, Passenger Vehicles and Motor Vehicles - Tax Issues
GST/HST Input Tax Credits for Vehicles and Aircraft
T4002 Business and Professional Income