Auto Expense Limits for 2023

Walter Harder

Most limits on claiming automobile expenses by employees and proprietors will increase starting on January 1. However, you may be surprised to see which limit has not changed.

After the limit for claiming CCA on a passenger vehicle remained at $30,000 for twenty years, the limit was increased to $34,000 (plus taxes) for 2022 and will increase again to $36,000 (plus taxes) for vehicles purchased after 2022.  For zero-emission vehicles, the $54,00 limit set in 2021 was increased to $59,000 for 2022 and will increase again in 2023 – to $61,000 (all plus taxes).

The limit for leasing costs has also changed.  It was set at $800 per month for 2001 to 2021 but the limit was increased to $900 per month for 2022.  Starting January 2023, the limit increases again to $950 per month.

The limit that has not changed is the claim for interest paid on auto loans.  It remains at $300 per month, as set back in 2001.

For employees who are reimbursed by their employers for the use of their vehicle, the 2022 rate of 61 cents per km maximum set for a non-taxable allowance increases in 2023 to 68 cents per km for the first 5,000 km driven plus 62 cents per km on additional km driven. The limit in the territories is six cents per km higher.

The rate used to determine the taxable benefit for employees’ use of their employer’s car for personal purposes increases from 29 cents per km for 2022 to 33 cents per km for 2023. For auto sales personnel, the rate is 3 cents per km lower.

These and other significant tax changes for the 2022 and 2023 tax years are the subject of the 2023 Advanced T1 Tax Update to be held virtually on January 18 and in person in Toronto on February 7.  Click here to register for January 18th event and click here for the February 7th in person event.