Type of vehicle you own or lease

For tax purposes, there are two types of vehicles you should know about. They are motor vehicles, and passenger vehicles.

The kind of vehicle you use may affect the expenses you can deduct. If you own or lease a passenger vehicle, there may be a limit on the amounts you can deduct for:

• capital cost allowance (CCA) for rental property
• interest expenses
• leasing costs

Motor vehicle

This is an automotive vehicle designed or adapted for use on highways and streets. A motor vehicle does not include a trolley bus or a vehicle designed or adapted to be operated only on rails.

Passenger vehicle

This is a motor vehicle designed or adapted primarily to carry people on highways and streets. It seats a driver and no more than eight passengers. Most cars, station wagons, vans, and some pick up trucks are passenger vehicles. They must respect the limits for CCA, interest, and leasing. A passenger vehicle does not include:

• an ambulance;
• clearly marked police and fire emergency-response vehicles;
• a motor vehicle you bought to use mainly (more than 50%) as a taxi, a bus to transport passengers, or a hearse in a funeral business;
• a motor vehicle you bought to sell, rent, or lease in a motor vehicle sales, rental, or leasing business;
• a motor vehicle (except a hearse) you bought to use in a funeral business to transport passengers; and
• a van, pick up truck, or similar vehicle that seats no more than the driver and two passengers and that, in the tax year you bought or leased it, was used more than 50% to transport goods and equipment to earn income;
• a van, pick up truck, or similar vehicle that, in the tax year you bought or leased it, was used 90% or more to transport goods, equipment, or passengers to earn income;
• a pick up truck that, in the tax year you bought or leased it, was used more than 50% to transport goods, equipment, or passengers while earning or producing income at a remote work location or at a special work site that is at least 30 kilometres from the nearest community having a population of at least 40,000 persons; and
• clearly marked emergency medical services vehicles used to carry paramedics and their emergency medical equipment.

For more information on the type of vehicle you have, see Vehicle definitions chart.

Forms and publications

• Guide T4036, Rental Income
• Form T776, Statement of Real Estate Rentals

Date modified:

2017-01-03