2022 Automobile Deduction Limits and Expense Benefit Rates for Business
- Posted:
The ceiling on the capital cost of passenger vehicles for capital cost allowance purposes will be increased from $30,000 to $34,000 (plus applicable federal and provincial sales taxes) for nonzero emission passenger vehicles purchased on or after January 1, 2022;
For eligible zero-emission passenger vehicles, the ceiling on the capital cost of passenger vehicles for capital cost allowance purposes will be increased from $55,000 to $59,000 (plus applicable federal and provincial sales taxes).
The limit on deductible leasing costs will be increased from $800 to $900 per month (plus applicable federal and provincial sales taxes) for leases entered into after 2021. This limit 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 limit on tax-exempt allowances paid by employers to employees will be increased by $0.02 to $0.61 per kilometre for the first 5,000 kilometres driven and $0.55 for each additional kilometre;
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 2021;
The general prescribed rate used to determine the taxable benefit relating to the personal portion of automobile operating expenses paid by employers will be increased by $0.02 from $0.27 to $0.29 per kilometer. For taxpayers employed principally in selling or leasing automobiles, the prescribed rate will be increased by $0.02 from $0.24 to $0.26 per kilometre.