On December 30, 2024, the Department of Finance Canada issued a news release detailing the limits on the deductibility of automobile expenses and the rates for calculating taxable benefits associated with automobile use for the year 2025 as follows:

·         The maximum allowable capital cost allowance (CCA) for Class 10.1 passenger vehicles was raised from $37,000 to $38,000, before tax, for vehicles (both new and used) acquired on or after January 1, 2025. 

·         Deductible leasing expenses was increased from $1,050 to $1,100 per month, before tax, for new leases initiated on or after January 1, 2025. 

·         The limit on tax-exempt allowances provided by employers to employees using their personal vehicles for business purposes in the provinces was increased by two cents to 72 cents per kilometer for the first 5,000 kilometers driven, and to 66 cents for each additional kilometer. In the territories (Northwest Territories, Yukon, and Nunavut), the limit was also raised by two cents to 76 cents per kilometer for the first 5,000 kilometers driven, and to 70 cents for each additional kilometer. 

·         The general prescribed rate for determining the taxable benefit of employees regarding the personal portion of automobile expenses covered by their employers was increased by one cent to 34 cents per kilometer for 2025. For employees primarily engaged in selling or leasing automobiles, the rate for calculating the taxable benefit was also raised by one cent to 31 cents per kilometer for 2025.

·         The maximum CCA for Class 54 zero-emission passenger vehicles ($61,000, before tax, for both new and used vehicles) remained unchanged for 2025, as this limit continued to be deemed appropriate. 

·         The maximum allowable interest deduction stayed at $350 per month for new automobile loans initiated on or after January 1, 2025.