The Québec Ministry of Finance has announced the automobile expense deduction limits and prescribed rates for automobile operating expense benefits that apply for the 2022 taxation year. Based on the principle of substantial harmonization between Québec and federal tax legislation, the province has announced that it will adopt the 2022 rates and limits put in place by the federal Department of Finance on December 23, 2021. Specifically, as of January 1, 2022, the rates in effect are as follows:
- The limit on tax-deductible per kilometre allowances paid to employees for using their personal vehicles for business purposes has increased by two cents to 61 cents per kilometre for the first 5,000 kilometres, and 55 cents per kilometre thereafter. The rates are four cents per kilometre higher in the Northwest Territories, Nunavut, and Yukon.
- The general prescribed rate used to determine the taxable benefit relating to the personal portion of automobile operating costs has increased by two cents to 29 cents per kilometre. For taxpayers employed principally in the selling or leasing of automobiles, the prescribed rate has also increased by two cents to 26 cents per kilometre.
- The capital cost allowance limit for passenger vehicles purchased in 2022 has increased by $4,000 to $34,000 for most vehicles and $59,000 for eligible zero-emission passenger vehicles (plus applicable federal and provincial sales taxes). This results in a maximum allowable input tax refund of $3,391.50 for QST paid on a passenger vehicle (which does not qualify as a zero-emission passenger vehicle) acquired in 2022.
- The limit on deductible leasing costs has increased by $100 to $900 per month (plus applicable federal and provincial sales taxes) for leases entered in 2022. Thus, the maximum allowable input tax refund that may be claimed for QST paid in respect of a lease entered in 2022 is $89.78 per month.
Please note that the applicable lease limit is determined by the year in which a lease is entered, rather than the year in which lease payments are made. As an example, for a lease entered before January 1, 2022, the allowable monthly lease limit remains $800 and the corresponding monthly maximum input tax refund would be $79.80 throughout the lease term.
The information bulletin may be accessed at: 2022 Automobile Limits
