Motor vehicle leasing costs – employees
You can deduct amounts you paid to lease a motor vehicle you used to earn employment income. Include the leasing costs 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 leasing costs you can deduct. If you leased a passenger vehicle before January 1, 2001, you will need to refer to the applicable chart in the 2008 version of the Guide T4044, Employment expenses to assist you in calculating the eligible leasing costs.
Note
The restrictions on the leasing cost deduction that apply to other passenger vehicles also apply to a zero-emission passenger vehicle.
You can get this version of the guide by going to T4044, Employment Expenses and clicking on the "Previous year versions" link, or calling the CRA at 1-800-959-8281.
Use the table below to calculate your eligible rental expenses for a passenger vehicle leased after December 31, 2000.
1. Enter the total lease charges paid for the vehicle in 2023.
$ Blank space for dollar value
Line 1
2. Enter the total lease payments deducted for the vehicle before 2023.
$ Blank space for dollar value
Line 2
3. Enter the total number of days the vehicle was leased in 2023 and previous years.
Blank space for number of days vehicle leased in 2012 an previous year
Line 3
4. Enter the manufacturer's list price.
$ Blank space for dollar value
Line 4
5. $42,353Footnote 1 + GSTFootnote 2 and PSTFootnote 2, or HSTFootnote 2
$ Blank space for dollar value
Line 5
6. Enter the amount from line 4 or line 5, whichever is more.
$ Blank space for dollar value
x 85%
$ Blank space for dollar value
Line 6
7. ($950Footnote 3 + GSTFootnote 2 and PSTFootnote 2, or HSTFootnote 2) x line 3 =
$ Blank space for dollar value
÷ 30 =
$ Blank space for dollar value
− Line 2
$ Blank space for dollar value
Line 7
8. ($36,000Footnote 4 + GSTFootnote 2 and PSTFootnote 2, or HSTFootnote 2) x line 1 =
$ Blank space for dollar value
÷ Line 6
$ Blank space for dollar value
Line 8
Your eligible leasing cost is the lower of the amounts on line 7 and line 8.
Note
Most leases do not include items such as insurance, maintenance, and taxes. You have to pay these amounts separately. Therefore, list these expenses separately on Form T777, Statement of Employment Expenses. Do not include them in your calculation of eligible leasing costs.
If the lease agreement for your passenger vehicle does include items such as insurance, maintenance, and taxes, include them as part of the lease charges in your calculation.
-
Example
On February 1, 2023, Tom, a resident of Nova Scotia, began leasing a car that meets the definition of a passenger vehicle. He used the car to earn employment income. Tom will complete the Chart using the following information for 2023:
- Monthly lease payment: $500
- Lease payments made for 2023: $5,500
- Number of days the car was leased in 2023: 334
- Manufacturer’s suggested list price: $28,000
- HST ($42,353 × 15% = $6,353) = $6,353
- HST ($950 × 15% = $143)= $143
- HST ($36,000 × 15% = $5,400) = $5,400
Eligible leasing costs for passenger vehicles leased after December 31, 2000 Line Leasing agreement information and calculations Amount 1. Total lease charges paid for the vehicle in 2023 $ 5,500 2. Total lease payments deducted for the vehicle before 2023 $ 0 3. Total number of days the vehicle was leased in 2023 and previous years 334 4. The manufacturer's list price $28,000 5. $42,353 + $6,353 $48,706 6. Enter the amount from line 4 or line 5,
whichever is more: $48,706 x 85%$41,400 7. ($950 + $143) = $1,093 x 334 = $365,062 ÷ 30 = $12,169 − line 2 $12,169 8. ($36,000 + $5,400) = $41,400 x $5,500 = $227,700,000 ÷ $41,400 $ 5,500
Repayments and imputed interest
When you lease a passenger vehicle, you may have either a repayment owing to you, or you may have imputed interest. If this is your situation, you cannot use the Chart, Eligible leasing costs for passenger vehicles leased after December 31, 2000. Instead, contact us.
Imputed interest is interest that would be owing to you if you were paid interest on money you deposited to lease a passenger vehicle. You can only consider imputed interest as leasing costs on a passenger vehicle if all the following apply:
- You made one or more deposits for the leased passenger vehicle
- All deposits are refundable
- The deposits total more than $1,000
Completing your tax return
Enter your eligible leasing costs on line 25 of Form T777, Statement of Employment Expenses.
Enter on line 22900, the allowable amount of your employment expenses from the total expenses line of Form T777.
Forms and publications
Page details
- Date modified: