Motor vehicle – Interest

You can deduct interest on the money you borrow to buy a motor vehicle, zero-emission vehicle, passenger vehicle, or a zero-emission passenger vehicle you use to earn business, professional, farming or fishing income. Include the interest as an expense when you calculate your allowable motor vehicle expenses.

When you use a passenger vehicle or a zero-emission passenger vehicle to earn income, there is a limit on the amount of interest you can deduct. To calculate the interest you can deduct, fill in "Chart B – Available interest expense for passenger vehicles and zero-emission passenger vehicles" of your form.


Heather's business has a December 31 year-end. On January 1, 2022, she bought a new passenger vehicle that she uses for both personal and business use. She borrowed money to buy the vehicle, and the interest she paid in her 2022 fiscal period was $2,200. Since the car that Heather bought is a passenger vehicle, there is a limit on the interest she can deduct.

Heather's available interest is the lesser of the following amounts:

  • $2,200 (the total interest she paid in her 2022 fiscal period)
  • $3,650 ($10 × 365 days)

Heather's records for her 2022 fiscal period:

Business kilometres
20,000 km
Total kilometres
25,000 km


Gasoline and oil
Repairs and maintenance
Interest (on loan to buy vehicle)
Licence and registration
Total vehicle expenses

Heather determines the motor vehicle expenses she can deduct in her 2022 fiscal period:

20,000 (business kilometres) ÷ 25,000 (total kilometres) × $7,160 = $5,728

Heather can deduct $5,728 as motor vehicle expenses for her 2022 fiscal period.

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