Québec Finance has announced the automobile expense deduction limits and the prescribed rates for automobile operating expense benefits that apply for the 2020 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 2020 that were put in place by the federal Department of Finance on December 19, 2019. Specifically, the rates in effect as of January 1, 2020 are as follows:
- The limit on tax-deductible per kilometre allowances paid to employees for using their personal vehicles for business purposes increases by 1 cent to 59 cents per kilometre for the first 5,000 kilometres, and to 53 cents per kilometre thereafter (these 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 will remain at 28 cents per kilometre (for taxpayers employed principally in the selling or leasing of automobiles, the prescribed rate will remain at 25 cents per kilometre);
- The capital cost allowance limit for passenger vehicles purchased in 2020 remains unchanged at $30,000, plus GST and QST, and for eligible zero-emission passenger vehicles purchased in 2020 remains at $55,000, plus GST and QST;
- The maximum allowable interest deduction for amounts borrowed to purchase a passenger vehicle remain unchanged at $300 per month for loans related to vehicles acquired in 2020; and
- The limit on deductible leasing costs stays at $800 per month (plus GST and QST) for leases entered into in 2020 (under a separate restriction, deductible leasing costs are prorated where the value of the passenger vehicle exceeds the capital cost ceiling).
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:
2020 Automobile Limits and Rates