The use of a company automobile has strict limits on deductible amounts and income inclusions. These rates are updated on an annual basis. The 2017 automobile rates have now been released by CRA. Most rates remain the same as in 2016 however some rates have changed:
Here are a few examples of employees who may qualify:
The general prescribed rate used to compute the employee taxable benefit relating to the personal portion of car operating expenses paid by employers will decline to $0.25 per kilometer from $0.26 but for employees involved mainly in selling or leasing automobiles the 2017 prescribed rate is $0.22 per kilometre.
Most other rates remain unchanged for 2017. This includes:
- Tax-exempt allowances paid by employers to employees will remain at $0.54/km for the first 5,000 km and $0.48 for each additional kilometre;
- The maximum allowable interest deduction for amounts borrowed to purchase a car will be $300 per month for loans related to vehicles acquired after 2016 while the related ceiling on deductible leasing costs will remain at $800 per month (plus applicable federal and provincial sales taxes) for leases entered into after 2016;
- The limit on the capital cost of passenger vehicles for capital cost allowance (depreciation) purposes will be $30,000 (plus applicable federal and provincial sales taxes) for purchases after 2016
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.