Québec Automobile Deduction Limits and Rates for 2016

Québec Finance has announced the automobile expense deduction limits and the prescribed rates for automobile operating expense benefits that will apply for the 2016 taxation year. Based on the principle of substantial harmonization between the Québec and Canadian federal tax legislation, the province has announced that it will adopt the rates and limits for 2016 that were put in place by the federal Department of Finance on December 24, 2015.

Specifically, the limits and rates in effect will be as follows:

• The limit on tax deductible, per kilometre allowances paid to employees for using their personal vehicles for business purposes has decreased by one cent each to 54 cents per kilometre for the first 5,000 kilometres, and 48 cents per kilometre thereafter;
• The capital cost allowance limit for passenger vehicles purchased in 2016 remains unchanged at $30,000, plus GST and QST;
• The limit on deductible leasing costs stays at $800 per month (plus GST and QST) for leases entered into after 2015 (under a separate restriction, deductible leasing costs are prorated where the value of the passenger vehicle exceeds the capital cost ceiling);
• The maximum allowable interest deduction for amounts borrowed to purchase a passenger vehicle is $300 per month for loans related to vehicles acquired after 2015; and
• The general prescribed rate used to determine the taxable benefit relating to the personal portion of automobile operating costs decreases by one cent to 26 cents per kilometre (for taxpayers employed principally in the selling or leasing of automobiles, the prescribed rate decreases to 23 cents per kilometre).

Please note that the above limits and rates may be subject to the input tax refund restriction for large businesses.

For further details, the Québec Information Bulletin announcing these rates and limits may be accessed at the following link:

2016 Automobile Limits and Rates