|
![](/web/20061129183711im_/http://www.fin.gc.ca/images/clear.gif) |
Ottawa, December 6, 2005 2005-086
Automobile Deduction Limits and Expense Benefit Rates for Business
Confirmed
The automobile expense deduction limits and the prescribed rates for the automobile operating expense benefit will apply in 2006 as follows:
- The ceiling on the capital cost of passenger vehicles for capital cost
allowance (CCA) purposes will remain at $30,000 (plus applicable federal
and provincial sales taxes) for purchases after 2005. This ceiling
restricts the cost of a vehicle on which CCA may be claimed for business
purposes.
- The limit on deductible leasing costs will remain at $800 per month
(plus applicable federal and provincial sales taxes) for leases entered
into after 2005. This limit, which ensures that the level of deductions
for leased and purchased vehicles is consistent, is one of two
restrictions on the deduction of automobile lease payments.
A separate restriction prorates deductible lease costs where the
value of the vehicle exceeds the capital cost ceiling.
- The maximum allowable interest deduction for amounts borrowed to
purchase an automobile will remain at $300 per month for loans related
to vehicles acquired after 2005. This limit reflects the reasonable cost
of financing a vehicle for business purposes.
- The limit on the deduction of tax-exempt allowances paid by employers
to employees using their personal vehicle for business purposes will
increase by 5 cents to 50 cents per kilometre for the first 5,000
kilometres driven and 44 cents for each additional kilometre. For the
Northwest Territories, Yukon and Nunavut, the tax-exempt allowance will
rise by 5 cents to 54 cents for the first 5,000 kilometres driven
and 48 cents for each additional kilometre. The allowance amounts
reflect the key cost components of owning and operating an automobile,
such as depreciation, financing, insurance, maintenance and fuel costs.
- The general prescribed rate used to determine the taxable benefit
relating to the personal portion of automobile operating expenses paid
by employers will increase by 2 cents to 22 cents per kilometre. For
taxpayers employed principally in selling or leasing automobiles, the
prescribed rate will be increased by 2 cents to 19 cents
per kilometre. The amount of the benefit reflects the costs of
operating an automobile. The additional benefit of having an
employer-provided vehicle available for personal use (i.e. the
automobile standby charge) is calculated separately and is also included
in the employee’s income.
The Government reviews these rates and limits annually, and announces any planned changes prior to the end of the calendar year. This practice ensures that businesses are aware of the new rates before the beginning of the year in which they apply.
___________________________________ For further information, media may contact:
David Gamble Public Affairs and Operations Division (613) 996-8080
If you would like to receive automatic e-mail notification of all news releases, please visit the Department of Finance Canada website at www.fin.gc.ca/scripts/register_e.asp |