Department of Finance Announces 2023 Automobile Deduction Limits

Published December 19, 2022

Department of Finance Canada has announced, effective January 1, 2023, the general prescribed rate used to determine the taxable benefit of employees relating to the personal portion of automobile expenses paid by their employers will increase by four cents to 33 cents per kilometre.

For people who are employed principally in selling or leasing automobiles, the rate used to determine the employee’s taxable benefit will increase by four cents to 30 cents per kilometre.

The following changes to the automobile income tax deduction limits and rates will be:
  • The limit on the deduction of tax-exempt allowances paid by employers to employees who use their personal vehicle for business purposes in the provinces will increase by seven cents to 68 cents per kilometre for the first 5,000 kilometres driven, and 62 cents for each additional kilometre. For the territories, the limit will also increase by seven cents to 72 cents per kilometre for the first 5,000 kilometres driven, and 66 cents for each additional kilometre.
  • Deductible leasing costs will be increased from $900 to $950 per month, before tax, for new leases entered into on or after January 1, 2023.
  • The ceiling for capital cost allowances (CCA) for zero-emission passenger vehicles will be increased from $59,000 to $61,000, before tax, in respect of vehicles (new and used) acquired on or after January 1, 2023.
  • The ceiling for CCA for passenger vehicles will be increased from $34,000 to $36,000, before tax, in respect of vehicles (new and used) acquired on or after January 1, 2023.