Section 67.3

Administrative Policy

2 April 2014 External T.I. 2012-0473151E5 F - Limitation du coût de location d'un véhicule

GST ITCs included under element E of formula

Are amounts of recovered GST and QST respecting the lease of a vehicle to be considered in element E in ss. 67.3(c) and (d)? CRA responded:

Most leases do not include expenses such as insurance, maintenance and sales taxes. …

Subsection 248(16) provides that an input tax credit or rebate with respect to goods and services tax in respect of a property or service is deemed to be assistance from a government. The same applies under subsection 248(16.1) with respect to Quebec sales tax. Consequently, these amounts are included in a taxpayer's income, or applied to reduce either the cost or capital cost of the property to which they relate, or the amount of the related expense or expense account, for taxation purposes.

Therefore … if sales taxes are included in the lease charges, the consumption tax amounts recovered in respect of the lease of the vehicle will be included in element E in the formulas under paragraphs 67.3(c) and (d) for the purpose of calculating the limitation in section 67.3.

Locations of other summaries Wordcount
Tax Topics - Income Tax Act - Section 248 - Subsection 248(16) GST ITCs constitute a “reimbursement” for car lease expense limitation purposes 162

22 May 1990 T.I. (October 1990 Access Letter, ¶1465)

The amount based on the manufacturer's list price is not reduced by employee deposits or by depreciation due to the age of the vehicle, and options owned by the leasing agency are included in that amount even when paid for by the employee.

23 April 1990 T.I. (September 1990 Access Letter, ¶1418)

"Amounts deducted" refers to the portion of the expense that was laid out to earn income.

18 October 89 Meeting with Quebec Accountants, Q.9 (April 90 Access Letter, ¶1166)

Where a corporation leases a fleet of vehicles, and subleases them to other members of the corporate group, s. 67.3 could apply both to it and to the other corporations.

88 C.R. - "Automobile Rules" - "With Respect to Expensive Automobiles"

S.67.3 applies to lump sums paid at the beginning or end of the lease.


Summerville, "Car Options Can Be Paid by Employees in Order to Avoid Leasing Limitations", Taxation of Executive Compensation and Retirement, October 1990, p. 347.