Department of Finance Announces 2024 Automobile Deduction Limits

Department of Finance Canada announced that effective January 1, 2024, 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 remain at 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 remain at 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 two cents to 70 cents per kilometre for the first 5,000 kilometres driven, and 64 cents for each additional kilometre. For the territories, the limit will also increase by two cents to 74 cents per kilometre for the first 5,000 kilometres driven, and 68 cents for each additional kilometre.
• Deductible leasing costs will be increased from $950 to $1,050 per month, before tax, for new leases entered into on or after January 1, 2024.
• The ceiling for capital cost allowances (CCA) for zero-emission passenger vehicles will remain the same for 2024 at $61,000, before tax, in respect of vehicles (new and used) acquired on or after January 1, 2024.
• The ceiling for CCA for passenger vehicles will be increased from $36,000 to $37,000, before tax, in respect of vehicles (new and used) acquired on or after January 1, 2024.