Automobiles—Deductions and Benefits / 39
Notes, continued
(2) The maximum amounts shown in the table are determined before all applicable sales
taxes, and are based on the automobile’s year of purchase.
Each automobile with a cost in excess of the limit is allocated to a separate capital cost
allowance (CCA) Class 10.1. The maximum capital cost of each automobile that may be
included in Class 10.1 is $30,000 plus all applicable federal and provincial sales taxes. A
Class 10.1 automobile is not subject to the normal recapture or terminal loss rules, and is
eligible for a 15% CCA claim in the year of disposition.
Motor vehicles having a cost equal to or less than the limit are included in Class 10. The
normal rules for recapture, terminal loss and CCA apply to these vehicles.
The CCA rate for both classes is 30% declining balance (15% in the year of acquisition).
(3) The maximum amounts shown in the table are determined before all applicable sales
taxes, and are based on the year the lease was entered into.
In general, the maximum deductible monthly lease charge is computed, as the lesser of:
• The actual lease payments paid or incurred in the year (including insurance,
maintenance and taxes if they are part of the actual lease payment)
• The prescribed monthly rate, or
• The annual lease limit, which is equal to the monthly pre-tax lease cost multiplied by
the ratio of
CCA cost limit
85% × greater of the prescribed limit and
the manufacturer’s suggested list price
(4) The maximum deductible monthly interest cost is based on the automobile’s year of
purchase.
(5) Operating expenses include items such as gasoline and oil, maintenance charges and
licences and insurance. Operating expenses do not include items such as interest, lease
costs for a leased automobile or parking costs.
(6) An “allowance” is generally defined as an amount paid for which the employee does not
have to account (by providing receipts, vouchers, etc.) to the employer for its actual use.
This can be contrasted to a “reimbursement” for which the employee must usually provide
the employer with receipts and that the employer repays to the employee on a dollar-for-
dollar basis.
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Current as of September 30, 2013