Canada Establishes 2024 Car Deduction Limits and Business Expense Rates

Canada Establishes 2024 Car Deduction Limits and Business Expense Rates

19 Dec, 2023

Canada Establishes 2024 Car Deduction Limits and Business Expense Rates

 

The Department of Finance Canada has unveiled the upcoming alterations in income tax deduction limits and expense rates applicable to automobiles for the year 2024. These changes, slated to take effect from January 1, 2024, bring significant adjustments:

Firstly, the capital cost allowances (CCA) ceiling for Class 10.1 passenger vehicles will see an increase to $37,000 (pre-tax) from $36,000 for both new and used vehicles acquired on or after January 1, 2024.

Additionally, the deductible leasing costs limit will undergo an enhancement to $1,050 (pre-tax) from $950 per month for new leases that commence from January 1, 2024.

Furthermore, the maximum allowable interest deduction for new automobile loans initiated after January 1, 2024, will rise to $350 (pre-tax) per month.

The adjustments extend to provinces and territories, reflecting changes in tax-exempt allowances for business-related personal vehicle use. Provincially, the limit for tax-exempt allowances will increase by two cents per kilometre, reaching 70 cents for the initial 5,000 kilometres and 64 cents for additional kilometres. Similarly, territories will observe a comparable rise to 74 cents for the initial 5,000 kilometres and 68 cents for any additional kilometres.

While the CCA ceiling for Class 54 zero-emission passenger vehicles remains consistent at $61,000 (pre-tax) for 2024, there are no changes anticipated in this aspect.

Moreover, the prescribed rate determining the taxable benefit for employees concerning personal automobile expenses will persist at 33 cents per kilometre for the year 2024. For individuals primarily engaged in selling or leasing automobiles, the taxable benefit rate will remain constant at 30 cents per kilometre for the same period.

These revisions introduced by the Department of Finance Canada are poised to impact various aspects of automobile-related tax deductions and expense rates, catering to changes in vehicle costs, leasing, and employee benefits associated with business-related vehicle usage.

 

 


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