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The song remains the same, or at least the deduction limits do.
Finance Canada announced over the Christmas holidays that the car-expense deduction limits and prescribed rates for the automobile operating expense benefit will remain unchanged for 2014.
The federal government reviews the rates on an annual basis.
Any sole proprietor or entrepreneur who claims vehicle use as a business expense or allows employees to claim vehicle use needs to be aware of these deduction limits and prescribed rates.
- The limit on the deduction of tax-exempt allowances paid by employers to employees using their personal vehicle for business purposes remains at $0.54 per kilometre for the first 5,000 km driven and $0.48 for each additional km. In the territories, the tax-exempt allowance remains at $0.58/$0.52.
- The prescribed rate used to determine the taxable benefit relating to the personal portion of automobile operating expenses paid by employers remains at $0.27 per kilometre. For taxpayers employed principally in selling or leasing automobiles, it remains at $0.24.
- The maximum deduction allowed for interest on a loan to purchase a passenger vehicle is $300 per month.
- The limit on deductible leasing costs stays at $800 a month, plus applicable federal and provincial sales taxes (GST, PST, HST).
- The ceiling on capital cost of passenger vehicles for capital cost allowance purposes sticks at $30,000, plus taxes, for purchases made after 2013.
Remember, if you’re using your passenger vehicle as a business expense to keep a detailed log book.
Here to help
A1 Accounting, a Calgary accounting and bookkeeping firm, is here to assist you with your taxes and planning. We specialize in personal taxes and small-business accounting and financial services. Contact one of our tax specialists and we can help you optimize the tax benefits and credits available to self-employed individuals and small businesses.
Fill out our contact form or give us a call at 403-226-8297.