Finance Canada 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 (down from 55-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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