Automobile deduction limits for businesses have been raised for 2025, the Department of Finance said in a release on Monday.
As of Jan. 1, 2025, the deduction limits for capital cost allowances (CCA), leasing and mileage reimbursements have all increased, the release said.
The CCA ceiling for passenger vehicles acquired after Jan. 1 will increase to $38,000 from $37,000, and deductible leasing costs will increase to $1,100 per month from $1,050 for new leases. Both figures began rising in 2022 as a result of inflation.
The CCA ceiling for zero-emission passenger vehicles will remain $61,000, “as this limit continues to be appropriate,” the Department of Finance said in the release.
CCA deductions are before sales tax.
The limit on the deduction of tax-exempt allowances paid by employers to employees who use their personal vehicles for business purposes in one or more provinces will increase by two cents to 72 cents per kilometre for the first 5,000 kilometres driven, and to 66 cents for each kilometre after that limit. When driving in the territories, the limit will increase by two cents to 76 cents and 70 cents, respectively.
Those mileage rates increased in 2020 and in 2022–24.
The news release also announced a one-cent increase, to 34 cents per kilometre, for the general prescribed rate that’s used to determine the taxable benefit of employees relating to the personal portion of automobile expenses paid by their employers.
For those employed primarily in selling or leasing automobiles, the rate used to determine the employee’s taxable benefit will go up one cent to 31 cents per kilometre.
These rates had also increased by two cents in 2024.
The maximum allowable interest deduction for new automobile loans will remain at $350 per month.