Cpa Kaival PatelDirector, Profuture Tax Academy · Helping Small Business, CPA & Bookkeepers to Grow

The "Luxury Car" Tax Trap. Unless it's a Zero-Emission Vehicle (ZEV), you are capped.

Name: The "Luxury Car" Tax Trap. Unless it's a Zero-Emission Vehicle (ZEV), you are capped.
Uploaded: 2026-02-03T23:18:06+00:00
Duration: 29 s
Channel: Cpa Kaival Patel
Description: In this brief advisory, the speaker warns Canadian business owners that the Canada Revenue Agency (CRA) imposes a strict capital cost allowance (CCA) cap…

3 Feb 2026 · 0 min

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In this brief advisory, the speaker warns Canadian business owners that the Canada Revenue Agency (CRA) imposes a strict capital cost allowance (CCA) cap on luxury passenger vehicles classified under Class 10.1. For a $100,000 vehicle, only $37,000 plus the applicable HST can be claimed for depreciation, leaving the remaining $63,000 unrecoverable. The speaker contrasts this with the more generous limit for zero‑emission (electric) vehicles, which allows a claim of $61,000 plus HST. The core recommendation is to consider an electric vehicle and to consult an accountant before entering a lease agreement, to avoid unexpected tax losses.

Thinking of buying a luxury car for your business? CRA is way ahead. So if you buy $100,000 car for your business, you can only claim $37,000 plus taxes. Remaining $63,000 plus HST vanishes into thin air. It's called the Class 10.1 limit, which means you can claim only $37,000 plus taxes on your luxury car. What's the solution? Solution is to buy the electronic car. If you buy electronic car, it has a limit of $61,000 plus HST. So talk to your accountant before you sign up a new lease.