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Businesses . . . Taxes . . . Automobile . . .

Business use of personal vehicle

Self-employed individuals who use a vehicle to earn business income and employees who are required to use their own vehicle in the course of their duties may deduct reasonable expenses for operating the vehicle.

The Income Tax Act defines two types of vehicles:

• Passenger vehicles are vehicles designed to carry no more than nine passengers.

• Motor vehicles are vehicles that are not passenger vehicles. They may also be designed to carry no more than nine passengers.

The following types of vehicles are specifically included as motor vehicles:

• Motor vehicles acquired to be sold, rented or leased

• Vans that are used more than 90% of the time to transport goods

• Pick up trucks that are used more than 50% of the time to transport goods

• Extended cab pick-up trucks used primarily for the transportation of goods, equipment or passengers in the course of earning or producing income at a work site at least 30 kilometres from any community having a population of at least 40,000

• Ambulances

• Taxis

• Busses used in the business of transporting passengers

• Hearses and other vehicles used in the transport of passengers in the course of a funeral

 Motor vehicles are a class 10 asset while passenger vehicles are a class 10.1 asset.

 Restrictions:

 Passenger vehicles have the following restrictions:

• Capital cost maximum remains at $30,000 plus GST and PST

• Leasing cost maximum remains at $800 per month plus GST and PST

• Interest deduction remains at $300 per month

Links:

• Back to Automobile page

• Types of expenses

• Personal use of a company owned vehicle

• Automobile log requirement

• GST implications

• Recent court cases

• Ask yourself ...

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Last modified: 06/28/06