Buying a car through your company is not automatically cheaper
Yan Zhou (周艳) · Licensed Life & Health Insurance Agent, Financial Services Regulatory Authority of Ontario (FSRA)
The short version
- Putting the car in the company is not automatically cheaper. It depends on the business-use share.
- For 2026 the depreciation ceiling on a passenger vehicle rose from $38,000 to $39,000. Buy a $100,000 car and the rest is invisible for tax.
- Leasing is capped at $1,100 a month, and loan interest at $350 a month.
- Personal use of a company car creates a taxable benefit that often exceeds the tax saved.
If something here applies to you, just ask me. Plain answers, no sales pitch.
(General tax information only. It is not tax advice. Circumstances differ — check the CRA website or speak to a qualified accountant before you act.)
Myth one: everything is deductible
Only the business share is. A pickup that spends 90% of its life hauling materials is close to fully deductible. A sedan that also does the school run is not.
How do you prove the share? A logbook. Date, distance, destination, purpose. That is exactly what CRA asks for.
Myth two: a more expensive car deducts more
There is a ceiling, and anything above it never comes back.
| Item | 2026 limit |
|---|---|
| Passenger vehicle depreciation ceiling (Class 10.1) | $39,000 before tax |
| Zero-emission passenger vehicle ceiling (Class 54) | $61,000 before tax |
| Deductible lease cost | $1,100 per month before tax |
| Deductible interest on a car loan | $350 per month |
The ceiling rose from $38,000 to $39,000 for vehicles acquired on or after 1 January 2026.
Worked through: the company buys a $100,000 sedan. Only $39,000 enters the depreciation calculation. The other $61,000 does nothing for you.
The zero-emission ceiling is far higher at $61,000. Worth pricing before you sign anything.
Source: Department of Finance Canada, “Government Announces the 2026 Automobile Deduction Limits and Expense Benefit Rates for Businesses”, 14 January 2026, checked 11 August 2026.
What about leasing?
Leases signed on or after 1 January 2026 are capped at $1,100 a month before tax.
Worked through: a $2,000 monthly lease deducts $1,100, not $2,000. Over a year that is $1,100 × 12 = $13,200 — then multiplied by your business-use share.
The taxable benefit nobody budgets for
Driving a company car privately is a benefit from the company, and it is added to your personal income.
It has two parts: one tied to the cost of the car, one tied to personal kilometres. The 2026 operating rate is 34 cents per kilometre, or 31 cents if you work principally in selling or leasing cars.
Owners tend to calculate the company-side saving and forget the personal-side income. Both sides have to be counted before the answer means anything.
The simpler route
Keep the car in your own name and have the company reimburse you per kilometre.
The 2026 tax-exempt rates are 73 cents per kilometre for the first 5,000 km and 67 cents after that.
Worked through: 8,000 business kilometres. 5,000 × $0.73 = $3,650, plus 3,000 × $0.67 = $2,010, giving $5,660.
The company deducts it, you receive it tax-free, and there is no taxable benefit and no depreciation schedule to maintain.
Same condition as always: keep the logbook.
If something here applies to you, just ask me. Plain answers, no sales pitch.
(General tax information only. It is not tax advice. Circumstances differ — check the CRA website or speak to a qualified accountant before you act.)
