We receive many inquiries regarding how to account for the business use of personal auto. There are many instances where a self employed person or a salaried employee is required to use personal automobile for business use.
The federal budget on 2014 automobile deduction limits define the maximum deductibility or ceiling limits on Capital Cost Allowance (depreciation), monthly lease costs, and monthly interest expense pertaining to auto.
The ceiling on the capital cost of passenger vehicles for capital cost allowance (CCA) purposes will remain at $30,000 (plus applicable federal and provincial sales taxes) for purchases after 2013. This ceiling restricts the cost of a vehicle on which CCA may be claimed for business purposes.
The maximum allowable interest deduction for amounts borrowed to purchase an automobile will remain at $300 per month for loans related to vehicles acquired after 2013.
The limit on deductible leasing costs will remain at $800 per month (plus applicable federal and provincial sales taxes) for leases entered into after 2013. This limit is one of two restrictions on the deduction of automobile lease payments. A separate restriction prorates deductible lease costs where the value of the vehicle exceeds the capital cost ceiling.
Business use of personal auto can be calculated based on percentage of use. Total kilometers driven for business use divided by total kilometers driven for the year. This percentage ratio can then be applied towards the total automobile expenses for the year (subject to the limits as mentioned above).
Remember it is important to keep a log book as to your automobile usage for CRA. Here is a link to a blank mileage report form that you can use.