Vehicle Amounts for 2016
This is from the Finance Ministry regarding Vehicle costs for 2016.
December 24, 2015 – Ottawa, Ontario – Department of Finance
Finance Minister Bill Morneau today announced the income tax deduction limits and expense benefit rates that will apply in 2016 when using an automobile for business purposes.
Although most of the limits and rates that applied in 2015 will continue to apply in 2016, there are two changes taking effect as of 2016.
The first is that the limit on the deduction of tax-exempt allowances that are paid by employers to employees who use their personal vehicle for business purposes will be reduced by 1 cent to 54 cents per kilometre for the first 5,000 kilometres driven, and to 48 cents per kilometre for each additional kilometre.
For the Northwest Territories, Nunavut and Yukon, the tax-exempt allowance is 4 cents higher, and will be reduced by 1 cent to 58 cents per kilometre for the first 5,000 kilometres driven, and to 52 cents per kilometre for each additional kilometre.
These allowances are intended to reflect the main costs of owning and operating an automobile, such as depreciation, financing, insurance, maintenance and fuel.
The second change in 2016 is that 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 be reduced by 1 cent to 26 cents per kilometre.
For taxpayers who are employed principally in selling or leasing automobiles, the prescribed rate used to determine the employee’s taxable benefit will be reduced by 1 cent to 23 cents per kilometre. The amount of this benefit is intended to reflect the costs of operating an automobile.
The additional benefit of having an employer-provided vehicle available for personal use (i.e., the automobile standby charge) is calculated separately based on capital costs and is also included in the employee’s income.
The following limits from 2015 will remain in place for 2016:
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This monthly update was prepared on January 3, 2016.
When considering any of ideas from this article, please contact the writer directly before acting on them. This will ensure that any information has been updated.
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