2020 Automobile Deduction Limits and Expense Benefit Rates for Businesses
The Federal Government has announced the income tax deduction limits and expense benefit rates that will apply in 2020 for automobiles used for business.
Most of the limits and rates from 2019 will continue to be used in 2020 including:
• The general prescribed rate that is used to determine the taxable benefit of employees relating to the personal portion of automobile operating expenses paid by their employers will remain at 28 cents per kilometer. For taxpayers who are employed principally in selling or leasing automobiles, the prescribed rate used to determine the employee's taxable benefit will remain at 25 cents per kilometer.
Only one change will take effect in 2020:
• The limit on the deduction of tax-exempt allowances that are paid by employers to employees who use their personal vehicle for business purposes for 2020 will be increased by 1 cent to 59 cents per kilometer for the first 5,000 kilometers driven, and to 53 cents per kilometer for each additional kilometer. For the Northwest Territories, Nunavut and Yukon, the tax-exempt allowance is four cents higher and will be increased to 53 cents per kilometer for the first 5,000 kilometers driven, and 57 cents per kilometer for each additional kilometer.