Canadian Tax Adviser, January 12, 2016.Finance announced that the limit on the deduction of tax-exempt allowances paid by employers to employees that use their personal vehicles for business purposes in 2016 decreases to 54 cents per kilometre for the first 5,000 kilometres (from 55 cents). For each additional kilometre, the rate decreases to 48 cents (from 49 cents). For the Northwest Territories, Nunavut and Yukon, the tax-exempt allowance is set four cents higher and will be reduced by one cent to 58 cents for the first 5,000 kilometres driven and to 52 cents for each additional kilometer (from 53 cents).
In addition, the general prescribed rate used to determine the taxable benefit relating to the personal portion of automobile operating expenses paid by employers for 2016 will decrease to 26 cents per kilometre (from 27 cents). For taxpayers employed principally in selling or leasing automobiles, the prescribed rate will decrease to 23 cents per kilometre (from 24 cents).
The ceiling on the capital cost of passenger vehicles for capital cost allowance (CCA) purposes, the limit on the deductible leasing costs for leases entered into after 2015 and the maximum allowable interest deduction for amounts borrowed to purchase an automobile remain unchanged from their 2015 amounts.
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Information is current to January 12, 2016. The information contained in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's National Tax Centre at 416.777.8500