Most of the Automobile Deduction Limits and Expense Benefit Rates that applied in 2018 will continue to apply in 2019. With two changes taking effect as of 2019:
The limit on the deduction of tax-exempt allowances
These are tax-exempt allowance paid by employers to employees who use their personal vehicle for business purposes. 2019 the rate will be increased by 3 cents to 58 cents per kilometre for the first 5,000 kilometres driven. In excess of 5000 kilometers 52 cents will be used.
Northwest Territories, Nunavut and Yukon, the tax-exempt allowance is 4 cents higher. For 2019, 62 cents per kilometre for the first 5,000 kilometres driven. In excess of 5000 kilometers 56 cents will be used.
These allowances are intended to reflect the main costs of owning and operating an automobile. Operating costs include depreciation, financing, insurance, maintenance, and fuel.
General Prescribed Taxable Benefit Rate
The general prescribed rate that is used to determine the taxable benefit of employees relating to the personal portion of automobile operating expenses paid by their employers will be increased by 2 cents to 28 cents per kilometre.
For taxpayers who are employed principally in selling or leasing automobiles the prescribed rate will be increased by 2 cents to 25 cents per kilometre.
The amount of this benefit is intended to reflect 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 based on capital costs and is also included in the employee’s income.
The following limits from 2018 will remain in place for 2019:
- Ceiling on the capital cost of passenger vehicles for capital cost allowance (CCA) purposes will remain at $30,000. The ceiling is before applicable federal and provincial-territorial sales taxes for purchases after 2018. This ceiling restricts the cost of a vehicle on which CCA may be claimed for business purposes.
- Maximum allowable interest deduction for amounts borrowed to purchase an automobile will remain at $300 per month.
- Limit on deductible leasing costs will remain at $800 per month. Plus applicable federal and provincial-territorial sales taxes for leases entered into after 2018. This limit 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.
About Expert Fiscaliste
Expert Fiscaliste provides Canadian and international income tax preparation and consulting services to individuals, businesses, and trusts. If use a automobile for business for business you maybe interested in our services call us at 514-954-9031, or visit our Contact Tax Experts page.
