Motor vehicle - Interest

You can deduct interest on money you borrow to buy a motor vehicle or passenger vehicle you use to earn business income. Include this interest as an expense when you calculate your allowable motor vehicle expenses.

However, there is a limit on the amount of interest you can deduct for a passenger vehicle. In such a case, the amount of interest you can deduct is limited to the lesser of the following two amounts:

• Total interest payable for the year; or
• $10 × the number of days for which interest was payable in the year. (Use $8.33 for passenger vehicles bought between December 31, 1996, and January 1, 2001. In all other cases, use $10.00).

When you use a passenger vehicle to earn income, there is a limit on the interest you can deduct. To calculate the amount of interest you can deduct, complete “Part 18 – Available interest expense for passenger vehicles” on Form T2125, Statement of Business or Professional Activities.

Forms and publications

• Guide T4002, Business and Professional Income
• Form T2125, Statement of Business or Professional Activities

Date modified:

2017-01-03