2019 Automobile Deduction Limits and Expense Benefit Rates for Business

On December 27, 2018, the Department of Finance Canada announced the income automobile tax deduction limits and expense benefit rates that will apply in 2019 when using an automobile for business purposes. The following two changes are effective January 1, 2019;

Mileage Reimbursement Rate in Canada for 2019

The tax-exempt automobile allowance paid by employers to employees who use their personal vehicle for business purposes will be increased by 3 cents to 58 cents per kilometer for the first 5,000 kilometres and then 52 cents thereafter. In the Northwest Territories, Nunavut and Yukon, the tax-exempt allowance is 4 cents higher.

The rate used to determine the taxable benefit of employees relating to the personal portion of automobile operating expenses paid by their employer will increase 2 cents to 28 cents per kilometer. Individuals employed primarily in selling or leasing automobiles, the mileage reimbursment rate will increase to 25 cents per kilometer. An additional benefit is calculated separately for the personal use of an employer-provided vehicle (standby charge).

Automobile Deduction Limits in Canada for 2019

The following vehicle deduction limits from 2018 (and earlier) will remain in place for 2019:

• Capital cost of passenger vehicles for capital cost allowance purposes remains at $30,000 (plus applicable sales taxes);
• Maximum interest deduction for automobile loans remains at $300/month;
• Deductible leasing costs is limited to $800 per month. There is a separate restriction that prorates the deductible leasing cost where the value of the vehicle exceeds the $30,000 capital cost limit.

For tax-related questions and more information about tax accounting services, contact the experienced accounting professionals at Hogg, Shain & Scheck.