The limit on the deduction of tax-exempt allowances paid by employers to employees using their personal vehicle for business purposes will increase by 3 cents to 45 cents per kilometre for the first 5,000 kilometres driven and 39 cents for each additional kilometre. For the Yukon Territory, Northwest Territories and Nunavut, the tax-exempt allowance will rise by 3 cents to 49 cents for the first 5,000 kilometres driven and 43 cents for each additional kilometre. The allowance amounts reflect the key cost components of owning and operating an automobile, such as depreciation, financing, insurance, maintenance and fuel costs.

The general prescribed rate used to determine the taxable benefit relating to the personal portion of automobile operating expenses paid by employers will increase by 3 cents to 20 cents per kilometre. For taxpayers employed principally in selling or leasing automobiles, the prescribed rate will be increased by 3 cents to 17 cents per kilometre. The amount of the benefit reflects the costs of operating an automobile.

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...back to 23 December 2004


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