2020 automobile deduction limits and expense benefit rates for businesses
Shortly before the beginning of each calendar year, the Department of Finance publishes the limits for certain automobile deductions and rates for businesses, which are applicable to that year. On December 19, 2019, the Department published a news release that contains the prescribed amounts for the 2020 calendar year. The only change compared to 2019 is the limit on the deduction of tax-exempt allowances that are paid by employers to employees who use their personal vehicle for business purposes. For 2020, the rate is increased by one cent to 59 cents per kilometre for the first 5,000 kilometres driven, and to 53 cents per kilometre for each additional kilometre. For the Northwest Territories, Nunavut, and Yukon, the tax-exempt allowance is four cents higher, and will be increased to 63 cents per kilometre for the first 5,000 kilometres driven, and 57 cents per kilometre for each additional kilometre.
The following amounts remain the same in 2020 as they were in 2019:
- the prescribed rate used in computing the taxable benefit to an employee for the personal use of an automobile is 28 cents per kilometre;
- the maximum capital cost for the purchase of an automobile is $30,000 plus applicable sales taxes ($55,000 plus sales taxes for a zero-emission vehicle);
- the maximum interest deduction for amounts borrowed to purchase an automobile is $300 per month; and
- the deduction limit for automobile leasing costs is $800 per month plus applicable sales taxes.