The Department of Finance Canada has announced that most of the vehicle limits that applied in 2020 will continue to apply in 2021.
Tax exempt allowance for 2021 is 59 cents per kilometer for the first 5000 kilometers driven per year, then it is 53 cents. If you are in the Northwest Territories, Nunavut or the Yukon the allowance is 4 cents higher. This means you can reimburse employees at these rates and the employee will not be taxed on the payment and the employer can claim a deduction. If you have incorporated your business you can reimburse yourself this way for driving your own vehicle for business purposes. If your business is not incorporated you cannot reimburse yourself by kilometer.
The ceiling for capital cost allowance is $30,000 for passenger vehicles and $55,000 for zero emission vehicles. This is unchanged from 2020.
The maximum allowable interest deduction per month is $300 and the limit on deductible vehicle leasing costs is $800, also unchanged from 2020.
The only change is a reduction in the taxable benefit to 27 cents per kilometer from 28 cents.