Do your employees use their personal vehicles for business purposes? The tax deduction limits and expense benefit rates have changed for 2019. Make sure you understand as an employer your responsibilities around allowances to cover expenses.

 

Most of the limits and rates that applied in 2018 will continue to apply in 2019. However, the following two changes will be taking effect as of 2019:

1. The limit on the deduction of tax-exempt allowances that are paid by employers to employees who use their personal vehicle for business purposes for 2019 is 58 cents per kilometer for the first 5,000 kilometers driven and 52 cents/ km after that. In the Northwest Territories, Nunavut and Yukon, the rate is 62 cents/km for 2019.

  • Compared to 2018, this rate increased by 3 cents for the majority of Canada and by 4 cents for the territories.

2. The general prescribed rate that is used to determine the taxable benefit of employees relating to the personal portion of automobile operating expenses paid by their employer has increased by 2 cents to 28 cents/km.

  • For taxpayers who are employed principally in selling or leasing automobiles, the prescribed rate used to determine the employee’s taxable benefit will be increased by 2 cents to 25 cents/km.

 

You can find the limits and rates from 2018 that will remain in place for 2019 here.

 

Seem like too much to digest?

Don’t Fret! These changes may sound a little complicated, but our experts are here to help. Our team will ensure you’re following the updated tax code! Speak with an RLB Advisor today, call us at 519-822-9933.

 

References: 

Government Announces the 2019 Automobile Deduction Limits and Expense Benefit Rates for Businesses: https://www.fin.gc.ca/n18/18-125-eng.asp