On December 24, 2015, Finance Minister Bill Morneau announced that, subject to two changes, the income tax deduction limits and expense benefit rates that applied in 2015 when using an automobile for business purposes will also apply in 2016.
The two changes for 2016 are:
- The limit on the deduction of tax-exempt allowances paid by employers to employees who use their personal vehicle for business purposes will be reduced by 1 cent to 54 cents (from $0.55 for 2015) per kilometre for the first 5,000 kilometres driven, and to 48 cents (from $0.49 for 2015) per kilometre for each additional kilometre; and
- The general prescribed rate 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 (from $0.27 for 2015) per kilometre. For taxpayers 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.
If you have any questions about this matter, please contact a member of the tax department.
Henry Korenblum MBA, CFP, CPA, CA
Henry Korenblum is a manager in Kestenberg Rabinowicz Partner’s Tax Group. If you have any questions relating to this article, we encourage you to contact Henry at firstname.lastname@example.org or 905.946.1300.
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