Although the cost of purchasing and operating an automobile continues to rise, the federal government is holding most automobile expense deduction limits for 2003 at last year's levels.
The ceiling on the capital cost of passenger vehicles for capital cost allowance (CCA) purposes stays at $30,000 plus applicable taxes for any vehicle purchased after 2002. This restricts the cost of a vehicle on which CCA may be claimed for a business.
The limits on deductible leasing costs for new leases also remains the same at $800 per month plus any applicable federal and provincial sales taxes.
The government has increased the limit on the deduction of tax-exempt allowances a business pays to its employees for the operation of a passenger vehicle.
The rate for 2014 stays at 53 cents per kilometre for the first 5,000 kilometres and 47 cents for every kilometre thereafter.
In the territories (Yukon, NWT and Nunavut) the rates are somewhat higher at 57 and 53 cents respectively. The amounts reflect the major cost components of owning and operating a vehicle such as depreciation, financing, maintenance and fuel costs.
The taxable benefit relating to the personal use portion of automobile operating expenses paid by employers increases to 26 cents per kilometre from 24 cents last year.
The maximum allowable interest deduction for amounts borrowed to purchase a vehicle remains at $300 per month.