2009 Automobile Deduction Limits and Expense Benefit Rates for Business

  • The ceiling on the capital cost of passenger vehicles for capital cost allowance (CCA) purposes remains at $30,000 (plus applicable federal and provincial sales taxes) for purchases after 2002. This ceiling restricts the cost of a vehicle on which CCA may be claimed for business purposes.

  • The limit on deductible leasing costs remains at $800 per month (plus applicable federal and provincial sales taxes) for leases entered into after 2002. This limit, which ensures that the level of deductions for leased and purchased vehicles is consistent, 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 the deduction of tax-exempt allowances paid by employers to employees remains at 52¢ per kilometer for the first 5,000 kilometers driven and at 46¢ for each additional kilometer. For the Yukon Territory, Northwest Territories and Nunavut, the tax-exempt allowance remains at 56¢ for the first 5,000 kilometer driven and at 50¢ for each additional kilometer. The allowance  amounts reflect the key cost components of owning and operating an automobile, such as depreciation, financing, maintenance and fuel costs.

  • The maximum allowable interest deduction for amounts borrowed to purchase an automobile remains at $300 per month for loans related to vehicles acquired after 2002. This limit reflects the reasonable cost of financing a vehicle for business purposes.

  • The general prescribed rate used to determine the taxable benefit relating to the personal portion of automobile operating expenses paid by employers remains at 24¢ per kilometer. For taxpayers employed principally in selling or leasing automobiles, the prescribed rate remains at 21¢ per kilometer. The amount of the benefit reflects the costs of operating an automobile. The additional benefit of having an employer-provided vehicle available for personal use (i.e., the automobile standby charge) is calculated separately and is also included in the employee’s income.

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