You can deduct interest you paid on money you borrowed to buy a motor vehicle or passenger vehicle that you use to earn employment income. Include the interest you paid when you calculate your allowable motor vehicle expenses.
If you use a passenger vehicle to earn employment income, there is a limit on the amount of interest you can deduct.
To determine the available interest expense you can deduct for your passenger vehicle, take the lesser of the following amounts:
- total interest paid in the year
- $10.00 x the number of days for which interest was paid (use $8.33 for passenger vehicles bought between December 31, 1996, and January 1, 2001)
Completing your tax return
Enter the amounts in the Calculation of Allowable Motor Vehicle Expenses area on line 10 of Form T777, Statement of Employment Expenses, and attach it to your paper return.
Enter on line 229, the allowable amount of your employment expenses from the total expenses line of Form T777.
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