Finance has announced the 2017 automobile deduction limits and expense benefit rates.
These rates apply when an automobile is used for business purposes. Finance announced that the general prescribed rate used to determine the taxable benefit relating to the personal portion of automobile operating expenses paid by employers for 2017 will decrease to 25 cents per kilometre (from 26 cents). For taxpayers employed principally in selling or leasing automobiles, the prescribed rate will decrease to 22 cents per kilometre (from 23 cents).
The limit on the deduction of tax-exempt allowances paid by employers to employees that use their personal vehicles for business purposes in 2017 remains unchanged at 54 cents per kilometre for the first 5,000 kilometres. For each additional kilometre, the rate is 48 cents. For the Northwest Territories, Nunavut and Yukon, the tax-exempt allowance is set four cents higher at 58 cents for the first 5,000 kilometres driven and 52 cents for each additional kilometre.
As well, the ceiling on the capital cost of passenger vehicles for capital cost allowance (CCA) purposes for purchases after 2016, the limit on the deductible leasing costs for leases entered into after 2016 and the maximum allowable interest deduction for amounts borrowed to purchase an automobile after 2016 remain unchanged from their 2016 amounts.
As a result, the limits and rates for 2016 and 2017 are as follows:
1The maximums shown in the tables are determined before all applicable federal and provincial sales taxes and are based on the automobile’s year of purchase.
2The maximum shown in the tables are determined before all applicable federal and provincial sales taxes and are based on the year the lease is entered into.
3These rates are set 4 cents higher for the Northwest Territories, Nunavut and Yukon.
For more information, contact your KPMG adviser.
Information is current to January 10, 2017. 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