The regulations regarding automobile expenses and the amount that can be claimed or deducted are subject to annual changes.
As such, Canadian tax planning for automobile expenses must be reviewed and updated each year.
For 2016, the income tax exempt car allowance limit paid by Canadian employers to their employees will decrease to $0.54 per km for the first 5,000 km driven and $0.48 for each additional km.
The taxable benefit for the personal portion of car operating expenses paid by employers for their employees will be reduced to $0.26 per km or $0.23 per km for those employed primarily in selling or leasing automobiles.
The maximum capital cost allowance for tax depreciation purposes remains at $30,000 for purchases after 2015.
The maximum deductible leasing costs will also remain at $800 per month for leases entered into after 2015, subject to a prorated restriction for vehicles that exceed the $30,000 capital cost ceiling.
For vehicles acquired after 2015, the maximum allowable deduction for interest on amounts borrowed for car purchases will remain at $300 per month.
We are available to assist with your tax planning needs, including car expenses.
“Please note that the information provided in this article is of a general nature and may not be accurate for your specific situation. The information is current as of the date of posting and is not intended to provide legal advice. It's always recommended that you consult with a professional accountant and lawyer for personalized guidance and advice."