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Published | Categories : Income tax - individuals, Income tax - businesses, Source deductions and employer contributions

Limits and Rates Related to the Use of an Automobile for 2021 and Temporary Rules Applicable to the Determination of the Value of the Taxable Benefits Pertaining to an Automobile for 2020 and 2021

The limits and rates used to determine deductible automobile expenses and calculate taxable benefits relating to the use of an automobile for 2021 are as follows:

  • The deductible limit for tax-exempt allowances paid by employers to employees remains $0.59/km for the first 5,000 kilometres travelled and $0.53/km for additional kilometres.
  • The prescribed amount used to determine the value of the taxable benefit an employee receives for the personal portion of the operating expenses of an automobile provided by his or her employer was reduced to $0.27/km. For taxpayers whose main occupation is selling or leasing automobiles, the prescribed amount was reduced to $0.24/km.
  • The depreciable value of non zero-emission passenger vehicles for capital cost allowance purposes remains $30,000 (before GST and QST) for vehicles purchased after 2020.
  • The depreciable value of eligible zero-emission passenger vehicles for capital cost allowance purposes remains $55,000 (before GST and QST) for vehicles purchased after 2020. Eligible zero-emission passenger vehicles include plug-in hybrids with a battery capacity of at least 7 kWh and vehicles that are fully electric or fully powered by hydrogen.
  • The deductible limit for interest paid on amounts borrowed to purchase a passenger vehicle remains $300/month for loans related to vehicles purchased after 2020.
  • The deductible limit for leasing charges remains $800/month (before GST and QST) for leases entered into after 2020. A separate restriction prorates deductible leasing charges when the value of the passenger vehicle exceeds the depreciable value.

In keeping with the principle of harmonization of tax legislation regarding automobiles, the same temporary rules for 2020 and 2021 for determining the value of taxable benefits relating to automobiles applicable under the federal tax system will also apply under Québec's tax system. For more information, see the COVID-19: FAQ for Employers.

For additional information, see information bulletin 2020-16 published by the Ministère des Finances.

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