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Vehicle Definitions For Tax Purposes

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".

TaxTips.ca Resources

Automobiles, Passenger Vehicles and Motor Vehicles - Tax Issues

Automobile Taxable Benefits

Capital Cost Allowance

Passenger Vehicle Limits

Canada Revenue Agency (CRA) Resources

T4002 Business and Professional Income

- definition of motor vehicle

- definition of passenger vehicle

T4044 Employment Expenses

Revised: October 26, 2023