Last updated: Feb. 28, 2022
The Department of Finance Canada recently announced that automobile leasing and mileage reimbursement and Capital Cost Allowance (CCA) limits have increased, as of January 1 2022. These changes reflect recent increases in the Consumer Price Index (CPI).
The changes announced are summarized as follows.
Capital Cost Allowance for Passenger Vehicles
The before-tax CCA deduction limits for passenger vehicles (new and used) acquired after January 1, 2022, will be increased as follows:
- Zero-emission passenger vehicles – from $55,000 to $59,000
- Passenger vehicles – from $30,000 to $34,000
Leasing Costs
Deductible leasing costs for new leases entered into after January 1, 2022 will be increased from $800 to $900 per month (before tax).
Tax-Exempt Allowances
The limit on the deduction of tax-exempt allowances paid by employers to employees who use their personal vehicle for business purposes in the provinces will increase as follows:
- Province: from 59 cents to 61 cents per kilometre for the first 5,000 kilometres driven, and 55 cents for each additional kilometre.
- Territories: from 63 cents to 65 cents per kilometre for the first 5,000 kilometres driven, and 59 cents for each additional kilometre.
Taxable Benefit Rates
If an employee is reimbursed for the business use of their personal vehicle, the general prescribed rate used to determine their taxable benefit will be increased to 29 cents per kilometre.
For those who are employed principally in selling or leasing automobiles, the rate used to determine the employee’s taxable benefit will be increased to 26 cents per kilometre.
Interest Deduction on Automobile Loans
For 2022, you can deduct up to $300 per month for new automobile loans, which is in line with prevailing interest rates.
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