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Canada: Increased deductible automobile allowance for 2020

Canada: Increased deductible automobile allowance

The Department of Finance announced that there is a $0.01 (one cent) increase to the income tax deduction limits on tax-exempt allowances paid by employers to employees who use their personal vehicles for business purposes in 2020.


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The 2020 limits are as follows:

  • $0.59 per kilometre for the first 5,000 kilometres (up from $0.58)
  • $0.53 per kilometre for each additional kilometer (up from $0.52)

For the Northwest Territories, Nunavut, and Yukon, the tax-exempt allowances are increased by four cents. As a result, the tax-exempt allowances for these three territories are now $0.63 for the first 5,000 kilometres driven and $0.57 for each additional kilometre.

The following limits remain unchanged from the 2019 amounts:

  • The general prescribed rate used to determine the taxable benefit relating to the personal portion of automobile operating expenses paid by employers after 2019
  • The ceiling on the capital cost of non-zero-emission passenger vehicles for capital cost allowance (CCA) purposes for purchases after 2019
  • The ceiling on the capital cost of eligible zero-emission passenger vehicles for CCA purposes for purchases on or after 19 March 2019
  • The limit on the deductible leasing costs for leases entered into after 2019
  • The maximum allowable interest deduction for amounts borrowed to purchase an automobile after 2019

Read a January 2020 report [PDF 187 KB] prepared by the KPMG member firm in Canada

$ = Canadian dollar

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