The Department of Finance has announced the 2023 automobile deduction limits and expense benefit rates for businesses. The amounts have generally gone up because of high inflation in Canada.
- The ceiling for capital cost allowances (CCA) for Class 10.1 passenger vehicles will be increased from $34,000 to $36,000, before tax, in respect of vehicles (new and used) acquired on or after January 1, 2023.
- The ceiling for CCA for Class 54 zero-emission passenger vehicles will be increased from $59,000 to $61,000, before tax, in respect of vehicles (new and used) acquired on or after January 1, 2023.
- Deductible leasing costs will be increased from $900 to $950 per month, before tax, for new leases entered into on or after January 1, 2023.
- The limit on the deduction of tax-exempt allowances paid by employers to employees who use their personal vehicle for business purposes in the provinces will increase by seven cents to 68 cents per kilometre for the first 5,000 kilometres driven, and to 62 cents for each additional kilometre.
The maximum allowable interest deduction for new automobile loans of $300 per month will remain the same for 2023.
