2021 Automobile Allowance Rate

Posted
June 24, 2021
in

Most reasonable per-kilometre allowance limits and rates remain the same in 2021.

Every year, the Canada Revenue Agency (CRA) updates the reasonable per-kilometre allowance rates. In December of 2020, they announced that most of the limits and rates applied in 2020 will continue to apply in 2021. The most commonly used method by employers is the deduction of tax-exempt allowances paid by employers to employees who use their personal vehicle for business purposes. This limit will remain at 59 cents per kilometre for the first 5,000 kilometres driven and 53 cents per kilometre for each kilometre above 5,000. If you have any questions about allowable automobile rates or other tax-exempt allowances, please reach out to your Bateman MacKay Tax and Business Advisor.

Other Rates Remaining the Same:

  • An additional 4 cents per kilometre applies for travel in the Northwest Territories, Nunavut and Yukon.
  • The maximum purchase price eligible for capital cost allowance (CCA) on passenger vehicles remains at:
    • $30,000 plus sales tax, for non zero-emission passenger vehicles
    • $55,000 plus sales tax, for eligible zero-emission passenger vehicles
  • The maximum allowable interest deduction for new automobile loans is $300 per month.
  • The limit on deductible leasing costs is $800 per month plus sales tax for new leases entered into

Changed Rates for 2021:

  • The prescribed rate used to determine the taxable benefit of employees relating to the personal portion of automobile expenses paid by their employers.
    • Decreased one cent from 28 to 27 cents per kilometre.
    • For people who are employed principally in selling or leasing automobiles, the rate to determine the employee’s taxable benefit also decreased by one cent from 25 to 24 cents per kilometre.

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