2007 Automobile Deduction Limits and Expense Benefit Rates for Business

The 2007 Automobile Deduction Limits remain the same as the rates in year 2006.

The limit on the deduction of tax-exempt allowances paid by employers to employees using their personal vehicle for business purposes for 2007 will remain at 50 cents per kilometre for the first 5,000 kilometres driven and 44 cents for each additional kilometre. For the Yukon Territory, Northwest Territories and Nunavut, the tax-exempt allowance will remain at 54 cents for the first 5,000 kilometres driven and 48 cents for each additional kilometre. The allowance amounts reflect the key cost components of owning and operating an automobile, such as depreciation, financing, insurance, maintenance and fuel costs.

The ceiling on the capital cost of passenger vehicles for capital cost allowance (CCA) purposes will remain at $30,000 (plus applicable federal and provincial sales taxes) for purchases after 2006. This ceiling restricts the cost of a vehicle on which CCA may be claimed for business purposes.

The limit on deductible leasing costs will remain at $800 per month (plus applicable federal and provincial sales taxes) for leases entered into after 2006.

The general prescribed rate used to determine the taxable benefit relating to the personal portion of automobile operating expenses paid by employers for 2007 will remain at 22 cents per kilometre.

For further details you may click on this link: http://www.fin.gc.ca/news06/06-089e.html