I-3 - Taxation Act

Section 421.6 Disposition versions

2006-03-01

421.6. Notwithstanding any other provision of this Part, where in a taxation year all or part of the lease charges in respect of a passenger vehicle are paid or payable, directly or indirectly, by a taxpayer and an amount may be deducted in respect of such charges in computing the taxpayer’s income for the year, for the purposes of determining the amount that may be so deducted, the aggregate of such charges are deemed not to exceed the lesser of the amounts determined by the following formulas:

(a)  [(A × B) / 30] − C − D − E;

(b)  [(F × G) / 0.85H] − I − J.

For the purposes of the formulas set forth in the first paragraph,

(a)  A is $600 or such other amount as may be prescribed;

(b)  B is the number of days in the period commencing at the beginning of the term of the lease of the vehicle and ending at the earlier of the end of the year and the end of the lease;

(c)  C is the aggregate of all amounts deducted in computing the taxpayer’s income for the preceding taxation years in respect of the lease charges in respect of the vehicle;

(d)  D is the amount of interest that would be earned on that part of the total of all refundable amounts in respect of the lease that exceeds $1,000 if interest were

i.  payable on the refundable amounts at the prescribed rate;

ii.  computed for the period preceding the end of the year during which the refundable amounts were outstanding;

(e)  E is the aggregate of all reimbursements that became receivable before the end of the year by the taxpayer in respect of the lease;

(f)  F is the aggregate of the lease charges in respect of the lease incurred in respect of the year or the aggregate of the lease charges in respect of the lease paid in the year, depending on the method regularly followed by the taxpayer in computing his income;

(g)  G is $20,000 or such other amount as may be prescribed;

(h)  H is the greater of

i.  $23,529 or such other amount as may be prescribed;

ii.  the manufacturer’s suggested retail price for the vehicle;

(i)  I is the amount of interest that would be earned on that part of the total of all refundable amounts in respect of the lease that exceeds $1,000 if interest were

i.  payable on the refundable amounts at the prescribed rate;

ii.  computed for the period in the year during which the refundable amounts are outstanding;

(j)  J is the aggregate of all reimbursements that became receivable during the year by the taxpayer in respect of the lease.

1990, c. 59, s. 168; 1991, c. 25, s. 189; 1993, c. 16, s. 177.