Québec Announces 2023 Automobile Deduction Limits and Rates

Based on the principle of substantial harmonization between Québec and federal tax legislation, the Québec Ministry of Finance has announced that it will adopt the automobile deduction rates and limits put in place by the federal Department of Finance for 2023.

Effective January 1, 2023, the limits and rates are as follows:

• The limit on tax-deductible per kilometre allowances paid to employees for using their personal vehicles for business purposes has increased by seven cents to 68 cents per kilometre for the first 5,000 kilometres, and 62 cents per kilometre thereafter. These rates are four cents per kilometre higher in the Northwest Territories, Nunavut, and Yukon.
• The general prescribed rate used to determine the taxable benefit relating to the personal portion of automobile operating costs has increased by four cents to 33 cents per kilometre. For taxpayers employed predominantly in the selling or leasing of automobiles, the prescribed rate is now 30 cents per kilometre.
• The capital cost allowance limit for passenger vehicles purchased in 2023 has increased by $2,000 to $36,000 for most vehicles and $61,000 for eligible zero-emission passenger vehicles (plus applicable federal and provincial sales taxes). This results in a maximum allowable input tax refund of $3,591 for QST paid on a passenger vehicle (which does not qualify as a zero-emission passenger vehicle) acquired in 2023.
• The limit on deductible leasing costs has increased by $50 to $950 per month (plus applicable federal and provincial sales taxes) for leases entered in 2023. Thus, the maximum allowable input tax refund that may be claimed for QST paid in respect of a lease entered in 2023 is $94.76 per month.

Please note that the applicable lease limit is determined by the year in which a lease is entered, rather than the year in which lease payments are made. The allowable monthly lease limit is $800 for a lease entered into before January 1, 2022, and $900 for a lease entered during 2022. The lease limits and associated maximum input tax refunds are summarized in the chart below:

The information bulletin may be accessed at: 2023 Automobile Limits