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New Auto Expense Limits 2008

New auto buyers or lessors will not benefit from additional tax breaks on their Capital Cost, interest expenses or leasing expenditures, which will remain the same for purchases in 2008, according to the Finance Department:

• The ceiling on the capital cost of passenger vehicles for capital cost allowance (CCA) purposes will remain at $30,000 (plus applicable federal and provincial sales taxes).
• The limit on deductible leasing costs will remain at $800 per month (plus applicable federal and provincial sales taxes) for leases entered into after 2007. A separate restriction prorates deductible lease costs where the value of the vehicle exceeds the capital cost ceiling.
• The maximum allowable interest deduction for amounts borrowed to purchase an automobile will remain at $300 per month for loans related to vehicles acquired after 2007.

However, the cost of tax exempt allowances paid by employers to employees who use their personal auto for business purposes has increased for 2008 as follows:

The prescribed rate used to calculate the taxable benefit for the personal portion of operating expenses paid to employees by employers rises to 24 cents per kilometer; except in the case of those employed selling vehicles, in which case the rate rises to 21 cents. All of the above increases are 2 cents higher than in 2007.

These and other pertinent personal tax changes to help tax and financial advisors assist their clients with tax preparation and planning in 2008 will be discussed at The Knowledge Bureau’s Annual January Line-by-Line Tax Update Workshop featuring an in depth look at Retirement Income Planning. Seats are still available for Winnipeg, London, Toronto, Calgary, Edmonton and Vancouver sessions, being held January 18 to 25. Call 1-866-953-4769 to enrol or visit our web site.

Also, check out the 2007 tax forms in the Essential Tax Fact Sheet 1-1 (Acrobat [PDF] file) (excerpted from Evelyn Jacks' latest book of the same name.

This information is used with the permission of Knowledge Bureau, Inc. For more information go to www.knowledgebureau.com.