February 2017 Newsletter

Each December, the Department of Finance publishes certain amounts and rates that apply for the purposes of computing automobile benefits for employees and the amounts that may be deducted for the use of a car in business or employment activities. The Department recently released the rates for 2017.

If your employer pays you an amount for the personal use of a car, you are normally assessed a taxable benefit based on the number of personal kilometres driven in the year. For 2017, the benefit is reduced from the 2016 rate by 1 cent to 25 cents per kilometre. For employees who are employed principally in selling or leasing automobiles, the rate is reduced from 23 cents per kilometre amount for 2016 to 22 cents for 2017.

Employers can normally deduct car allowances paid to employees for work-related travel. However, there is a monetary limit to the deduction.

The limit for 2017 is the same as for 2016: 54 cents per kilometre for the first 5,000 kilometres driven in the year, and 48 cents per kilometre for each additional kilometre. In the Northwest Territories, Nunavut and Yukon, the tax-exempt allowance is 4 cents higher, and remains 58 cents per kilometre for the first 5,000 kilometres driven, and 52 cents per kilometre for each additional kilometre.

Monetary limits for deductible car expenses remain the same for 2017, and the same limits have been in place since 2001. Tax depreciation or capital cost allowance (CCA) is limited to the first $30,000 cost of the car (plus GST/HST and any provincial sales tax) for purchases in 2017. The deduction of lease payments is limited to $800 per 30-day period and is reduced further if the cost of the car exceeds the CCA ceiling. The deduction of interest on car loans remains limited to $300 per 30-day period. In all cases, the deduction must be pro-rated, based on your work or business use relative to total use of the car.

Last modified on February 14, 2017 12:00 am
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