For tax purposes, there are two types of vehicles you should know about. They are motor vehicles and passenger vehicles (or zero-emission passenger vehicles).

The kind of vehicle you use may affect the expenses you can deduct. If you own or lease a passenger vehicle or a zero-emission passenger vehicle, there may be a limit on the amounts you can deduct for capital cost allowance (CCA), interest, and leasing costs.

Motor vehicle

A motor vehicle is an automotive vehicle designed or adapted for use on highways and streets. It is not a trolley bus, or a vehicle designed or adapted to be operated exclusively on rails.

Passenger vehicle

A passenger vehicle is a motor vehicle (other than a zero-emission 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 are subject to the limits for capital cost allowance (CCA), interest, and leasing costs.

A passenger vehicle does not include:

• an ambulance
• clearly marked police and fire emergency-response vehicles
• clearly marked emergency medical services vehicles used to carry paramedics and their emergency medical equipment
• 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
• certain vans, pick-up trucks, or similar vehicles (see the Vehicle definitions chart below for details)

The Vehicle definitions chart should help you determine what type of vehicle you have. It does not cover every situation, but it should give you a better idea of how the Canada Revenue Agency (CRA) defines vehicles you bought or leased.

Zero-emission passenger vehicle (ZEPV)

A ZEPV means an automobile of a taxpayer that is included in Class 54. The following are special rules applicable to a ZEPV:

• The capital cost of the ZEPV will be restricted to a prescribed amount for the purpose of calculating the CCA. For 2024, the prescribed amount will be $61,000, plus the federal and provincial sales taxes that would have been paid if the ZEPV was purchased for $61,000 (before the application of federal and provincial sales tax)
• When a ZEPV whose capital cost is subject to the above restriction, is disposed of, its proceeds of disposition will be adjusted. Specifically, the proceeds of disposition will be multiplied by a fraction equal to the ratio of the capital cost (that is, the prescribed amount) of the vehicle divided by the actual cost^{Footnote 2} of the vehicle

For more information, see Classes of depreciable properties, Leasing costs, and Interest expense.

Completing your tax return

Enter on line 22900, the allowable amount of your employment expenses from the total expenses line of Form T777, Statement of Employment Expenses.

Forms and publications

• Form T777, Statement of Employment Expenses