Should your corporation buy or lease your next vehicle? (2026 rules)

Summary

If you own a Canadian corporation and you’re about to get a vehicle, you have four routes: the corporation buys it, the corporation leases it, you own it and bill the corporation for each kilometre you drive for work, or you own it and absorb the cost.

Our default for a typical owner-manager, meaning someone who both owns their corporation and works in it, is the third route: keep the vehicle in your own name and have the corporation pay you 73 cents a kilometre for the first 5,000 business kilometres in the year, then 67 cents after that.¹ Those payments are deductible to the corporation, tax-free in your hands, and absent from your T4, the slip reporting what your corporation paid you.

Two situations flip that answer toward corporate ownership:

The vehicle is a work truck or van meeting the CRA’s usage tests below. Buy it in the corporation, because all three dollar limits fall away: on the price it can write off, and on the loan interest and lease payments it can deduct.
The vehicle costs $39,000 or less before sales tax and you’ll drive it almost entirely for work. Buy it in the corporation, because the write-off limit sits at $39,000 so nothing gets disallowed, and light private use keeps the taxable income you personally report small.

If the corporation will hold an ordinary car costing more than $39,000 anyway, we’d lease rather than buy, unless you plan to keep it long after a lease would have ended. Electric and plug-in hybrid vehicles are out of scope here, because their much larger write-off collides with the personal taxable benefit below and needs its own arithmetic. Our vehicle calculator shows how much of a price or a lease payment the ceilings leave out.

Passenger vehicles and work vehicles

Which of two groups your vehicle lands in matters most. A passenger vehicle is designed mainly to carry people on streets and highways, seating a driver plus no more than eight passengers, which sweeps in cars, minivans, SUVs and most pickups.² Every dollar limit here applies only to passenger vehicles, and a vehicle escaping the definition has no dollar cap, though its cost still has to be reasonable.

Two exceptions matter most to owners like you, and the CRA tests each on how the vehicle was used in the year you bought or leased it. Every percentage in this guide is a share of kilometres driven, which is what your logbook records:

A van or pickup seating no more than the driver and two passengers, driven more than 50% of its kilometres to carry goods or equipment in the course of earning income.
A van, pickup or SUV seating four to nine, driven 90% or more of its kilometres to carry goods, equipment or passengers in the course of earning income.

These thresholds are cliffs: a four-to-nine-seat truck at 85% remains subject to every limit in this guide, and clearing 90% means the truck can’t double as the family car.

Capital cost allowance and the $39,000 ceiling

You can’t deduct what a vehicle cost in the year you buy it. Rather, you add the cost to a numbered pool called a class and take a percentage of the leftover balance off the corporation’s taxable income each year, which is capital cost allowance (CCA), the tax system’s version of depreciation. Ordinary vehicles sit in Class 10 or Class 10.1, both written off at 30% a year on a declining balance (i.e. 30% of what’s left, not of the original price).³

Price decides which class. For a passenger vehicle acquired in 2026 the dividing line is $39,000 before sales tax, and a vehicle keeps the ceiling for its year of acquisition.⁴ At or below it the vehicle goes into Class 10 at what you paid. Above it the vehicle goes into Class 10.1, where the Income Tax Act treats its cost as $39,000 plus the sales tax on $39,000 however much you paid.

The figures below run on a depreciable cost of $39,000. What your corporation actually depreciates turns on how much of the sales tax on the vehicle it gets back.⁵

Your corporation pays one sales tax on the vehicle, 13% HST in Ontario5% GST in British Columbia5% GST in Alberta5% GST in Saskatchewan5% GST in Manitoba15% HST in New Brunswick14% HST in Nova Scotia15% HST in Prince Edward Island15% HST in Newfoundland and Labrador, and a registrant claims all of it back up to the cap. The claim then comes off the vehicle’s capital cost, so the depreciable base is the $39,000 ceiling itself. A corporation that isn’t registered claims nothing back and depreciates the ceiling with that HST added, which raises every figure below with it.

Alberta charges no provincial sales tax, so the only tax on the vehicle is 13% HST in Ontario5% GST in British Columbia5% GST in Alberta5% GST in Saskatchewan5% GST in Manitoba15% HST in New Brunswick14% HST in Nova Scotia15% HST in Prince Edward Island15% HST in Newfoundland and Labrador, and a registrant claims it back up to the cap. The claim then comes off the vehicle’s capital cost, so the depreciable base is the $39,000 ceiling itself. A corporation that isn’t registered claims nothing back and depreciates the ceiling with that GST added, which raises every figure below with it.

Your corporation pays two sales taxes on the vehicle: 13% HST in Ontario5% GST in British Columbia5% GST in Alberta5% GST in Saskatchewan5% GST in Manitoba15% HST in New Brunswick14% HST in Nova Scotia15% HST in Prince Edward Island15% HST in Newfoundland and Labrador, which a registrant claims back up to the cap, and a separate provincial sales tax, which nobody claims back because it sits outside the GST/HST system. The provincial tax stays in what the vehicle cost, so the depreciable base is the $39,000 ceiling plus that tax, and every figure below rises with it. Ask us for your province’s base.

For a vehicle bought now, the corporation deducts 45% of that cost in the first year, the 30% rate multiplied by 1.5. A federal budget bill that became law on March 26, 2026 added the extra half and suspended the rule that would otherwise have halved the first-year claim to 15%.⁶ On a $39,000 base that’s $17,550 off taxable income in year one, which saves tax at your corporation’s own rate of about 11.7% combined federal and Ontario corporate tax in 2026about 11% combined federal and British Columbia corporate tax in 2026about 11% combined federal and Alberta corporate tax in 2026about 10% combined federal and Saskatchewan corporate tax in 2026about 9% combined federal and Manitoba corporate tax in 2026about 11.5% combined federal and New Brunswick corporate tax in 2026about 10.5% combined federal and Nova Scotia corporate tax in 2026about 10% combined federal and Prince Edward Island corporate tax in 2026about 11% combined federal and Newfoundland and Labrador corporate tax in 2026,⁷ and year two runs at 30% of the $21,450 still left, so $6,435.

One caveat on the 2026 figures: the $39,000 ceiling and the per-kilometre rates here are amounts the Department of Finance announced on January 14, 2026, and the enacting regulation wasn’t registered as at the date of writing.

Lease limits and loan interest

Leasing has a monthly limit rather than a lifetime one: for a lease signed on or after January 1, 2025, including during 2026, the corporation deducts at most $1,100 a month before sales tax.⁸ That limit is locked to the date you signed and never moves for the life of the contract (e.g. a 2023 lease keeps the 2023 limit until it ends). A second rule scales the monthly deduction below $1,100 once the manufacturer’s list price runs well above the ceiling. Where that starts to bite moves with the sales tax the comparison adds to the ceiling, which starts at 13% HST in Ontario5% GST in British Columbia5% GST in Alberta5% GST in Saskatchewan5% GST in Manitoba15% HST in New Brunswick14% HST in Nova Scotia15% HST in Prince Edward Island15% HST in Newfoundland and Labrador and takes in any provincial sales tax beside it. Less sales tax means a lower list-price trigger. Loan interest is capped separately, at $350 a month of deduction however much the corporation actually pays, and both caps apply to a passenger vehicle at any price, unlike the $39,000 write-off ceiling, which turns on what the vehicle cost.⁹

Buying gives the corporation the ceiling amount of deductions across the vehicle’s whole life, $39,000 where the sales tax comes back in full, while leasing at the full cap gives $13,200 a year with no lifetime total, so three years of leasing comes to $39,600. The two sit close enough that the list-price rule, a large refundable deposit or the length of the lease decides which is bigger. On the flip side, you own nothing at the end of a lease, and you’re exposed to kilometre limits and wear-and-tear charges.

Company cars and the standby charge

If your corporation owns or leases a car and you drive it personally, you report a taxable benefit, meaning income taxed though no cash reached you. The standard standby charge for an owned car is 2% of its full cost including sales tax for every 30-day period of availability. For a leased car, it starts from two-thirds of eligible lease costs, excluding insurance. Both calculations can be reduced where the business-use and personal-distance conditions are met.¹⁰ If the corporation also pays operating costs, the standard 2026 benefit is 34 cents per personal kilometre, with an alternative calculation available for mainly business use.¹¹ A qualifying work truck instead attracts a benefit based on personal use.

For an owned car, the corporation’s deduction stops at the ceiling, while your standby benefit starts from the full purchase price. A $90,000 SUV in a corporation can put over $20,000 of taxable income on its owner’s return every year, which at a top personal rate near 50% is roughly $10,000 of tax a year on a vehicle bought once. In our view that mismatch is why an owner with real personal driving should keep the vehicle out of the corporation.

Owning the vehicle yourself

A per-kilometre allowance sidesteps the standby charge: the corporation deducts the payments from its own income and reports nothing on your T4.¹ At 20,000 business kilometres, the 73 and 67 cent rates put $13,700 in your hands, tax-free.

What the allowance costs you is that you bought the car with money you’d already paid personal tax on: at a top rate near 50%, the corporation pays you roughly $2 of salary for every $1 the car costs. These rates work well for a modest car you drive a lot, and badly for an expensive car you drive only a little.

Two mechanical traps matter. The allowance has to be measured on distance alone, and a separate rule makes it taxable in your hands if the corporation both pays the allowance and reimburses expenses on the same driving, so it can’t pay you 73 cents and your fuel.¹² You also need a logbook showing the date, destination, purpose and distance of every business trip, because without one the burden of defending your business-use percentage falls on you on reassessment, and that is an argument owners usually lose.

How often this changes

Re-run the decision each year before signing. The purchase and lease ceilings attach to the acquisition or contract date, so a purchase on December 28, 2026 is capped at $39,000 for that car’s life while the same purchase a week later takes the 2027 ceiling. Per-kilometre allowance and operating-benefit rates instead follow the year of payment or use.¹³ Re-run it early if your share of business kilometres drifts near 50% or 90%, or if you’re buying close to 2030, when the extra half of first-year deduction disappears.

Closing thoughts

Most articles on this question run a spreadsheet comparing the deductions from buying and leasing, then declare a winner. Canada’s caps sit closely enough together that the gap in deductions is smaller than the gap in cash you hand over, so decide on cash flow. The bigger questions are who should own the vehicle at all, and whether the vehicle you want is one these rules treat kindly.

How we handle it

We run the four routes on your numbers before you sign: your expected business and personal kilometres, the vehicle’s price and your corporation’s income. Where the corporation should hold it, we set the standby charge and operating benefit up in payroll and carry the CCA schedule through the return. Where you hold it yourself, we set the allowance up in payroll and reconcile it to your logbook at year-end.

Department of Finance Canada, “Government Announces the 2026 Automobile Deduction Limits and Expense Benefit Rates for Businesses”, January 14, 2026. Verified 2026-08-09. Rates in Yukon, the Northwest Territories and Nunavut are 77 cents and 71 cents. As at the verification date the amending regulation had not been registered. The 2026 rates therefore rest on the announcement rather than on Income Tax Regulations section 7306, which still reads 72 and 66 cents for 2025. Income Tax Act paragraph 18(1)(r) limits the corporation’s deduction to the prescribed rate. A corporation paying 73 cents today is a cent above the rate on the books, pending a registration expected to reach back to January 1. The corporation can also recover the GST or HST built into an allowance of this kind. Recovery happens on its own return, even though you never handed it a receipt (Excise Tax Act section 174). ↩ ↩²
Canada Revenue Agency, “Type of vehicle you own”, with the definition of “automobile” in Income Tax Act subsection 248(1). Verified 2026-08-09. The Act’s defined term is “automobile”. A passenger vehicle is an automobile acquired after June 17, 1987, so for anything you would buy today the two mean the same thing. Other carve-outs not discussed above cover ambulances, marked emergency response vehicles, hearses bought for that use, and vehicles bought for sale, rental or lease in a vehicle sales business. What falls away for a vehicle outside the definition is the dollar cap, not the ordinary requirement that the cost be reasonable and incurred to earn income. ↩
Canada Revenue Agency, “Classes of depreciable property”, with Income Tax Regulations Schedule II. Verified 2026-08-09. Class 16, at 40% a year, covers taxis, short-term rental vehicles (e.g. one acquired for renting where nobody is expected to rent it for more than 30 days in any 12-month period) and freight trucks rated above 11,788 kg. None of those carry the passenger-vehicle ceiling. ↩
Department of Finance Canada, “Government Announces the 2026 Automobile Deduction Limits and Expense Benefit Rates for Businesses”, January 14, 2026, and Income Tax Regulations subsection 7307(1), consolidation current to 2026-06-17. Verified 2026-08-09. The $39,000 ceiling applies to vehicles, new and used, acquired on or after January 1, 2026. As at the verification date the amendment to subsection 7307(1) had not been registered. The consolidated regulation still read $38,000 for acquisitions after 2024, which is the figure for a 2025 acquisition. Earlier ceilings, all before sales tax: $37,000 for 2024 acquisitions, $36,000 for 2023, $34,000 for 2022 and $30,000 from 2001 through 2021. The deeming rule is Income Tax Act paragraph 13(7)(g). The description of B in subsection 7307(1) then adds the federal and provincial sales tax that would have been payable on a vehicle costing the ceiling amount before tax. ↩
Excise Tax Act section 201 caps the GST or HST a registrant can claim back on a passenger vehicle. The cap is the tax on the capital cost ceiling in Income Tax Act paragraph 13(7)(g), verified 2026-08-09 against the consolidated Act. Tax recovered that way is then treated as assistance and comes off the vehicle’s capital cost, which is what brings the depreciable base back to the pre-tax $39,000 wherever the whole of the sales tax is recoverable. A provincial sales tax charged outside the GST/HST system isn’t recoverable that way at all, so it stays in the capital cost and the base sits above the ceiling. No per-province recovery amount or depreciable base is stated on this page. The capital-cost reduction sits in Income Tax Act subsection 248(16) with subsection 13(7.1) and was not verified against the consolidated Act this session, so see reviewFlags. A corporation that isn’t registered, or that uses the vehicle 50% or less in commercial activity, gets no credit and depreciates the tax-inclusive amount. Canada Revenue Agency, Charge and collect the GST/HST - Which rate to charge, for the Ontario rate. Verified 2026-08-13.Canada Revenue Agency, Charge and collect the GST/HST - Which rate to charge, for the British Columbia rate. Verified 2026-08-13.Canada Revenue Agency, Charge and collect the GST/HST - Which rate to charge, for the Alberta rate. Verified 2026-08-13.Canada Revenue Agency, Charge and collect the GST/HST - Which rate to charge, for the Saskatchewan rate. Verified 2026-08-13.Canada Revenue Agency, Charge and collect the GST/HST - Which rate to charge, for the Manitoba rate. Verified 2026-08-13.Canada Revenue Agency, Charge and collect the GST/HST - Which rate to charge, for the New Brunswick rate. Verified 2026-08-13.Canada Revenue Agency, Charge and collect the GST/HST - Which rate to charge, for the Nova Scotia rate. Verified 2026-08-13.Canada Revenue Agency, Charge and collect the GST/HST - Which rate to charge, for the Prince Edward Island rate. Verified 2026-08-13.Canada Revenue Agency, Charge and collect the GST/HST - Which rate to charge, for the Newfoundland and Labrador rate. Verified 2026-08-13. ↩
Income Tax Regulations, subsections 1100(2) and 1104(4.01), consolidation current to 2026-06-17, last amended 2026-03-26. Verified 2026-08-09. The bill is Bill C-15, the Budget 2025 Implementation Act, No. 1, which received royal assent on March 26, 2026. The vehicle has to be acquired after 2024 and become available for use before 2034. Available for use means delivered and ready to drive, which for a vehicle on order can fall in a later year than the one you signed the purchase contract in. It also must not have been previously owned by you, by a family member, or by another corporation you control (e.g. selling your own car to your corporation gets no first-year bump). The extra half applies only where the vehicle became available for use before 2030. ↩
The rate quoted is the combined federal and provincial corporate rate on active business income inside the small business limit, for a December 31 year-end. The rate is what a dollar of deduction is worth, and this page doesn’t state what any year’s capital cost allowance saves in cash, because the cash figure depends on your own province and on whether the corporation’s profit sits inside the limit. For Ontario: Ontario Ministry of Finance, Corporations Tax: Corporate Income Tax (ontario.ca), corroborated by 2026 Ontario Budget - Annex: Details of Tax Measures (budget.ontario.ca/2026/annex.html) and Bill 97 status page (ola.org). Verified 2026-08-13. The rate reduction is prorated for taxation years straddling July 1, 2026 (Ontario 2026 Budget annex: 'The tax rate reduction would be prorated for taxation years straddling July 1, 2026.'). Enacted by Bill 97, Plan to Protect Ontario Act (Budget Measures), 2026, S.O. 2026, c. 2, which amends s. 31(4) of the Taxation Act, 2007 so the small business deduction rate is 9.3% for days in a taxation year after June 30, 2026 (11.5% general rate minus 9.3% = 2.2%). The combined figure adds the federal 9% small business rate and is our arithmetic.For British Columbia: Province of British Columbia (Ministry of Finance), Corporate income tax rates – Province of British Columbia. Verified 2026-08-13. Rate of 2% effective April 1, 2017, and a business limit of $500,000 effective January 1, 2010. Budget 2026 (tabled February 17, 2026) announced no corporate income tax rate changes. The combined figure adds the federal 9% small business rate and is our arithmetic.For Alberta: Government of Alberta - Treasury Board and Finance / Tax and Revenue Administration, Tax, levy, and prescribed interest rates. Verified 2026-08-13. The current-rates table on the issuer page lists 2% with effective date July 1, 2020 (the rate has been 2% since 2017, and July 1, 2020 is the current table row). Alberta Budget 2026 (tabled 2026-02-26) made no corporate rate changes. The issuer rate table loaded 2026-08-13 shows no pending 2026 change. The combined figure adds the federal 9% small business rate and is our arithmetic.For Saskatchewan: The Income Tax Act, 2000, c I-2.01 (Saskatchewan), King's Printer consolidation, The Income Tax Act, 2000, s. 56(2) - Rates of tax. Verified 2026-08-13. Rate history in s. 56(2): 2% to Sept 30 2020, then 0% Oct 1 2020 - Jun 30 2023, then 1% from Jul 1 2023 with no end date. The 2026-27 budget (tabled March 18, 2026) makes no change: budget.saskatchewan.ca/economy states the budget is "maintaining the small business tax rate at one per cent". The combined figure adds the federal 9% small business rate and is our arithmetic.For Manitoba: Manitoba Finance, Corporate Income Taxes - Province of Manitoba. Verified 2026-08-13. Budget 2026 (tabled March 24, 2026, Information Bulletin 126) announced no corporate income tax rate changes, so 0% holds for all of 2026. The combined figure adds the federal 9% small business rate and is our arithmetic.For New Brunswick: New Brunswick Income Tax Act, S.N.B. 2000, c. N-6.001 (official consolidation, laws.gnb.ca), corroborated by NB Department of Finance and Treasury Board corporate tax page, New Brunswick Income Tax Act (consolidated), s.57(1)(a) and s.57(1.025). Verified 2026-08-13. The combined figure adds the federal 9% small business rate and is our arithmetic.For Nova Scotia: Nova Scotia Department of Finance and Treasury Board (novascotia.ca), Corporate income tax rates - Government of Nova Scotia. Verified 2026-08-13. The cut from 2.5% to 1.5% is applied on a days-prorated basis for taxation years straddling April 1, 2025 (NS Income Tax Act s. 40(2) formula, and CRA Schedule 346 Part 3 prorates 2.5% for days before April 1, 2025 and 1.5% after March 31, 2025). Budget 2026-27 (novascotia.ca/budget) keeps the rate at 1.5% - no 2026 change. The combined figure adds the federal 9% small business rate and is our arithmetic.For Prince Edward Island: PEI Department of Finance and Affordability, and the Income Tax Act, R.S.P.E.I. 1988, Cap. I-1, Provincial Corporate Income Taxes | Government of Prince Edward Island. Verified 2026-08-13. The 1% rate has applied since January 1, 2022 and was left unchanged by the July 1, 2025 package (which changed the general rate and threshold) and by Budget 2026. Statutory basis: Income Tax Act (PEI) s. 37.11.6 (years beginning on or after 2022-01-01 and ending before 2025-07-01) and s. 37.11.7 (years beginning on or after 2025-07-01), factor A = 1.0% in both. The combined figure adds the federal 9% small business rate and is our arithmetic.For Newfoundland and Labrador: Income Tax Act, 2000, SNL 2000 c I-1.1, s. 40(3) (as amended by 2026 c14 s4), announced in Government of Newfoundland and Labrador Budget 2026, Income Tax Act, 2000 (consolidated), House of Assembly of Newfoundland and Labrador, and the Budget 2026 News Release. Verified 2026-08-13. Announced in Budget 2026 (tabled April 29, 2026) retroactive to January 1, 2026, and already enacted: the consolidated statute's s. 40(3) reads 2% with amendment citation 2026 c14 s4. Section 40(4) prorates straddle years by days: 2.5% for days before January 1, 2026 and 2% for days after December 31, 2025. Budget 2026 also announced further cuts to 1.5% on January 1, 2027 and 1% on January 1, 2028, but those steps are NOT yet in the consolidated statute (no 1.5%/1% text found). The Finance department's Corporate Income Tax web page still showed 2.5% when loaded on 2026-08-13 - that page lags the statute. The combined figure adds the federal 9% small business rate and is our arithmetic. ↩
Income Tax Regulations, subsections 7307(3) and 7307(4), with Income Tax Act section 67.3. Confirmed unchanged for 2026 by Department of Finance Canada, January 14, 2026. Verified 2026-08-09. Sales tax on the $1,100 is deductible on top of it. Limits for earlier leases, set by the date the lease was entered into: $1,050 for 2024, $950 for 2023, $900 for 2022 and $800 from 2001 through 2021. The second limit in paragraph 67.3(d) compares the manufacturer’s list price against 100/85 of the amount in subsection 7307(1), which is the ceiling with sales tax already added. The list price at which the second limit starts to bite therefore moves with the sales tax rate in the province, and no per-province trigger price is stated on this page. Above that price the deduction is scaled by the tax-inclusive ceiling over 85% of the list price. Paragraph 67.3(c) also reduces the deduction by imputed interest at the prescribed rate on refundable amounts above $1,000 and by any reimbursement you receive. CRA had not republished its worked chart on 2026 figures as at the verification date. Canada Revenue Agency, Charge and collect the GST/HST - Which rate to charge, for the Ontario rate. Verified 2026-08-13.Canada Revenue Agency, Charge and collect the GST/HST - Which rate to charge, for the British Columbia rate. Verified 2026-08-13.Canada Revenue Agency, Charge and collect the GST/HST - Which rate to charge, for the Alberta rate. Verified 2026-08-13.Canada Revenue Agency, Charge and collect the GST/HST - Which rate to charge, for the Saskatchewan rate. Verified 2026-08-13.Canada Revenue Agency, Charge and collect the GST/HST - Which rate to charge, for the Manitoba rate. Verified 2026-08-13.Canada Revenue Agency, Charge and collect the GST/HST - Which rate to charge, for the New Brunswick rate. Verified 2026-08-13.Canada Revenue Agency, Charge and collect the GST/HST - Which rate to charge, for the Nova Scotia rate. Verified 2026-08-13.Canada Revenue Agency, Charge and collect the GST/HST - Which rate to charge, for the Prince Edward Island rate. Verified 2026-08-13.Canada Revenue Agency, Charge and collect the GST/HST - Which rate to charge, for the Newfoundland and Labrador rate. Verified 2026-08-13. ↩
Income Tax Act section 67.2, with the amount set by Income Tax Regulations subsection 7307(2). Confirmed unchanged for 2026 by Department of Finance Canada, January 14, 2026. Verified 2026-08-09. The section caps the deduction rather than the interest. CRA calculates the annual limit as $350 divided by 30, multiplied by the number of days in the fiscal period. The cap applies to any passenger vehicle whatever it cost, and the amount is fixed by when the vehicle was acquired. ↩
Canada Revenue Agency, “Automobile provided by the employer”, with the charge itself in Income Tax Act subsection 6(2). Verified 2026-08-09. Cost includes options, accessories and sales tax, with no reduction for a trade-in. Where the corporation leases, the charge is two-thirds of the lease payments. The monthly lease cost includes sales tax and excludes insurance, and any down payment or lump-sum charge is prorated across the term. Subsection 6(2) applies to an automobile made available to an employee. A vehicle outside that definition, including a work truck meeting one of the carve-outs above, is instead taxed on the value of your personal use as an ordinary employment benefit. Owned-versus-leased calculations and reduced standby-charge conditions rechecked 2026-09-25 against the current CRA automobile guidance. ↩
Canada Revenue Agency, “Automobile provided by the employer”, with Income Tax Regulations section 7305.1 and Income Tax Act paragraph 6(1)(k). Confirmed for 2026 by Department of Finance Canada, January 14, 2026. Verified 2026-08-09. The rate is 31 cents a kilometre for an employee whose job is selling or leasing automobiles. No operating benefit arises at all where you reimburse the corporation for the personal share of those costs within 45 days after the end of the year. An owner using the vehicle more than half the time for business may instead elect, in writing before year-end, to compute the benefit as half the standby charge. The current CRA automobile guidance was also checked 2026-09-25 for the optional calculation based on half the standby charge, available where employment use exceeds 50% and the employee gives written notice before year-end. ↩
Income Tax Act subparagraphs 6(1)(b)(x) and 6(1)(b)(xi). Verified 2026-08-09 against the consolidated Act. Subparagraph (x) makes an allowance unreasonable, and therefore taxable in your hands, where it is measured on anything other than the kilometres driven for work. Subparagraph (xi) is a separate rule reaching the same result where you both receive an allowance and are reimbursed for expenses on the same use. Reimbursements of supplementary business insurance and of toll or ferry charges are carved out. ↩
Department of Finance Canada, 2026 automobile deduction limits and expense benefit rates. Purchase/lease limits and annual allowance/benefit rates have different effective-date rules. Distinction verified 2026-09-25. ↩

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