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Automobile Expense Deduction

(2) Limits and Rates for 2000

(3) Deductible Expenses

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Tax Tips  - October 2, 2000

Automobile Expense Deduction (2)
Limits and Rates  for 2000

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The government reviews automobile expense deduction limits and prescribed rates for determining the taxable benefit on automobile operating expenses annually, and announces any changes prior to the end of the calendar year. This practice ensures that businesses know the rules before the start of the year in which they apply. 

Automobile Allowances
For the year 2000, the deduction limit on tax-exempt allowances paid by employers to employees is:

Automobile Expenses
The limit on the capital cost of passenger vehicles for capital cost allowance (CCA) purposes is $27,000 (plus applicable federal & provincial sales taxes) for purchases after 1999.

The limit on deductible monthly leasing costs is $700 (plus applicable federal and provincial sales taxes) for leases entered into after 1999. A separate restriction prorates deductible lease costs where the value of the vehicle exceeds the capital cost ceiling. 

The maximum allowable monthly interest deduction for amounts borrowed to purchase an automobile is $250 for purchases after 1999. 

Automobile Benefits
The general prescribed rate used to determine the taxable benefit relating to the personal portion of automobile operating expenses paid by employers is 15 cents per kilometre. For taxpayers employed principally in selling or leasing automobiles, the prescribed rate is 12 cents per kilometre.