Good afternoon.
Right now, under the Income Tax Act, the deduction limit is $30,000 for businesses that purchase a passenger vehicle. For example, if they buy a $50,000 vehicle, they can only deduct $30,000 for tax purposes. The intent is to reflect the average cost of a vehicle in Canada. The limit has been increased to $55,000 for electric vehicles, since their cost is much higher. This is about reflecting their cost.
Businesses that need to purchase a passenger vehicle will therefore be able to deduct up to $55,000. If the vehicle costs $70,000, a portion will be non-deductible, but the limit will be higher than the $30,000 threshold currently imposed for gasoline-powered vehicles. The limit is for passenger vehicles. It is not imposed on trucks hauling freight, or on buses and taxis. For those, the full amount may be deducted.