2023 Automobile Deduction Limits and Expense Benefit Rates for Businesses
- Posted:
- The ceiling on the capital cost of passenger vehicles for capital cost allowance purposes will be increased from $34,000 to $36,000 (plus applicable federal and provincial sales taxes) for passenger vehicles purchased on or after January 1, 2023;
- For eligible zero-emission passenger vehicles, the ceiling on the capital cost of passenger vehicles for capital cost allowance purposes will be increased from $59,000 to $61,000 (plus applicable federal and provincial sales taxes);
- The limit on deductible leasing costs will be increased from $900 to $950 per month (plus applicable federal and provincial sales taxes) for leases entered into after 2022. 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 $0.07 to $0.68 per kilometre for the first 5,000 kilometres driven and $0.62 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 2022;
- 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 $0.04 from $0.29 to $0.33 per kilometer. For taxpayers employed principally in selling or leasing automobiles, the prescribed rate will be increased by $0.04 from $0.26 to $0.30 per kilometre.