February 11, 2019
All Tax Articles


The maximum tax-free car allowance deductible for employers for allowances paid to their employees for work purposes is increased by 3 cents from the 2018 amount to 58 cents per kilometre for the first 5,000 kilometres driven, and to 52 cents per kilometre for each additional kilometre driven during the year. For the Northwest Territories, Nunavut and Yukon, the maximum deductible tax-exempt allowance is 4 cents higher, so it is 62 cents per kilometre for the first 5,000 kilometres driven, and 56 cents per kilometre above that.

The rate to be used to calculate the taxable benefit of employees relating to the personal portion of automobile operating expenses paid by their employers will be increased by 2 cents to 28 cents per kilometre. For taxpayers who are employed principally in selling or leasing automobiles, the rate will be increased by 2 cents to 25 cents per kilometre.

For the deduction of car expenses, the following maximum ceilings that have been in place since 2001 remain in place.

• For capital cost allowance (tax depreciation), the maximum cost is $30,000 plus applicable GST/HST and any provincial sales tax;

• For interest on a car loan, the maximum deduction is $300 per 30-day period; and

• For car lease costs, the maximum deduction is $800 plus applicable sales taxes per 30- day period, which may be reduced further if the manufacture’s list price of the car exceeds a certain cost ceiling.

This letter summarizes recent tax developments and tax planning opportunities from a third-party affiliate; however, we recommend that you consult with an expert before embarking on any of the suggestions contained in this blog post, which are appropriate to your own specific requirements. Please feel free to get in touch with Lee & Sharpe to discuss anything detailed above, we would be pleased to help.
Adam H. Sharpe

Hello, my name is Adam Sharpe, I am a partner at Lee & Sharpe.

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