The Finance Minister has announced the automobile expense deduction limits and the prescribed rates for automobile operating expense benefits that will apply for the 2019 taxation year. Similar to last year’s announcement issued for the 2018 taxation year, this year’s announcement contains only two rate changes from the previous year. Specifically, the rates in effect as of January 1, 2019, will be as follows:
- The limit on tax-deductible per kilometre allowances paid to employees for using their personal vehicles for business purposes increases by 3 cents to 58 cents per kilometre for the first 5,000 kilometres, and to 52 cents per kilometre thereafter. The rates are 4 cents per kilometre higher in the Northwest Territories, Yukon and Nunavut;
- The general prescribed rate used to determine the taxable benefit relating to the personal portion of automobile operating costs increases by 2 cents to 28 cents per kilometre. For taxpayers employed principally in the selling or leasing of automobiles, the prescribed rate will also increase by 2 cents to 25 cents per kilometre;
- The capital cost allowance limit for passenger vehicles purchased in 2019 will remain at $30,000, plus applicable federal and provincial sales taxes. This results in a maximum allowable input tax credit of $1,500 for GST paid ($3,900, or $4,500 for HST paid at 13%, or 15% respectively) for a passenger vehicle acquired in 2019; and
- The limit on deductible leasing costs remains at $800 per month (plus applicable federal and provincial sales taxes) for leases entered into in 2019. Thus, the maximum allowable input tax credit that may be claimed for GST paid in respect of a lease entered into in 2019 is $40 per month ($104, or $120 for HST at 13%, or 15% respectively).
Please note that the above limits and rates may be subject to the recapture of input tax credit requirements in Prince Edward Island.
The news release may be accessed at the following link: