CAPITAL
COST CEILING | $30,000
(plus
applicable federal and provincial sales taxes)
| This
limit restricts the cost of a car on which capital cost allowance (depreciation)
can be claimed. The ceiling increased from $27,000 to $30,000 for cars purchased
after 2000. |
MAXIMUM MONTHLY
LEASE
COST
| $800
(plus applicable
federal and provincial sales taxes)
|
A separate
restriction prorates deductible lease costs where the value of the car is greater
than the capital cost ceiling. The monthly limit increased from $700/month to
$800/month for leases entered into after 2000. |
MAXIMUM
MONTHLY
INTEREST DEDUCTION
|
$300
| This
limit restricts the deductibility of interest expense on monies borrowed to purchase
a car. The monthly limit increased from $250/month to $300/month for loans related
to cars bought after 2000. |
LIMIT
ON TAX-FREE CAR
ALLOWANCES
| $.50/km
for the first 5,000 km
$.44/km for each additional km
|
This limit restricts the amount that an employer
can deduct for tax-free allowances paid to employees who use
their cars for work. These rates are intended to reflect the
key cost components of operating a car, including depreciation.
The limits provide a simple system to administer by allowing
companies to deduct reimbursement costs without requiring employees
to include the amounts in income or justify their costs. Higher
allowance rates can be paid and deducted by employers, provided
they are treated as taxable to the employee. In this case, the
employee would claim a car expense deduction, provided certain
conditions are met. |
OPERATING
EXPENSE
TAXABLE BENEFIT RATE
| $.22/km |
This rate is used to determine the value of the
taxable benefit received by an employee where an employer provides
a company car and pays the operating expenses. Employees must
include this benefit in their income. This rate only reflects
the operating expenses and does not include depreciation and
financing costs. An additional taxable benefit (standby charge)
is calculated separately and is also included in the employee's
income. |
