2023 Automobile Deduction Limits and Expense Benefit Rates for Businesses

On December 16, 2022, the government announced updates to the automobile income tax deduction limits and expense benefit rates that will apply in 2023.

As of January 1, 2023:

• The cost limit for passenger vehicles (Class 10.1 for Capital Cost Allowances (CCA)) will be increased from $34,000 to $36,000 before tax on vehicles acquired on or after January 1, 2023.

• The cost limit for zero-emission passenger vehicles (Class 54 for CCA) will be increased from $59,000 to $61,000 before tax on vehicles acquired on or after January 1, 2023.

• Leasing costs, eligible for a deduction, will be increased from $900 to $950 per month before tax for new leases beginning on or after January 1, 2023.

• The tax-exempt allowance on employers paying employees who use their personal vehicle for business purposes in provinces will increase from 61¢/kilometer to 68¢/kilometer for the first 5,000 kilometers. The territories will see this limit increase from 66¢/kilometer to 72¢/kilometer. The prescribed rate to determine the taxable benefit of employees using a business vehicle for personal reasons will be increased from 29¢/kilometer to 33¢/kilometer. For individuals in the business of selling or leasing automobiles, this rate will increase from 26¢/kilometer to 30¢/kilometer.

• The maximum interest deduction for new automobile loans is unchanged at $300 per month.

*The contents of this article are intended to provide general, broad guidance only. This article should not be relied upon to cover specific situations, and you should not act upon the information contained herein without obtaining relevant professional advice. Please feel free to contact our office to discuss the information presented herein in the context of your specific circumstances. Lekadir LLP, its principals, employees, and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this article or for any decision based on it.