Work trucks and vans: how Ontario trades escape the $39,000 vehicle cap

For a passenger vehicle bought in 2026, the most you can put in the capital cost allowance pool is $39,000 before tax, whatever you paid. A cargo van or pickup used mainly to haul tools and material is often not a passenger vehicle. It is a motor vehicle, it goes in Class 10, and there is no ceiling on the cost. On a $75,000 truck that is around $36,000 that either reaches a tax return or never does, and which side you land on turns on how many people the vehicle seats and what share of its distance is spent hauling.

The 2026 limits

Those come from the Department of Finance 2026 automobile deduction limits and apply to vehicles acquired, and leases and loans entered into, on or after January 1, 2026. The ceiling also caps the input tax credit, so the depreciable base stays at $39,000.

Two definitions, and only one of them is capped

CRA's type of vehicle page defines a motor vehicle as "an automotive vehicle designed or adapted for use on highways and streets". A passenger vehicle is one "designed or adapted primarily to carry people" that "seats a driver and no more than eight passengers". Every ceiling above applies to passenger vehicles only.

Three details in that chart do most of the damage. The test is measured on distance driven rather than days worked. It is applied in the year you bought the vehicle, so a truck bought in November is judged on November and December driving. And once seating capacity passes three, the threshold jumps from more than half the distance to 90 per cent, so cab configuration alone can change the result on two identical trucks.

One relief valve exists. A pickup used more than 50 per cent of its distance to carry goods, equipment or passengers to a remote work location or special work site at least 30 kilometres from the nearest community of 40,000 people is a motor vehicle. Very little Greater Toronto Area work qualifies, so a contractor in Vaughan is on the 90 per cent test.

What the cap is worth on a $62,000 pickup

A capped vehicle goes into Class 10.1 at 30 per cent. One that escapes goes into Class 10, also at 30 per cent, on its full cost. The accelerated investment incentive was reinstated for property acquired on or after January 1, 2025 and available for use before 2030, which puts the first-year deduction back at three times the normal half-year amount. On a 30 per cent class that is 45 per cent of the cost in year one instead of 15 per cent.

That is $16,801 of extra deduction inside three years. At a combined small business rate of 11.2 per cent, being 9 per cent federal plus the Ontario lower rate of 2.2 per cent from July 1, 2026, the timing difference is worth about $1,882, and the $23,000 capped away for good about $2,576. CRA's own page on the incentive still carried the older phase-out table when we checked in August 2026, so confirm the first-year figure for your purchase and year end before filing.

Class 10.1 then behaves oddly on disposal. Each vehicle sits in its own class rather than a pool, and the recapture and terminal loss rules do not apply to it, though you may claim half a year of CCA in the year of sale. Sell that capped truck in year four with $10,510 of undepreciated capital cost left, and nothing goes into income and nothing comes out. A Class 10 vehicle works the ordinary way, where proceeds reduce the pool.

Three trucks in the same yard

The cargo van. Two seats, racking and stock in the back, hauling well beyond half its distance. Motor vehicle, full cost depreciable.

The crew cab pickup. Six seats, so it needs 90 per cent of distance carrying goods or equipment. Achievable for a truck that lives at the shop, and it fails the week it does the school run on the way to site.

The half-ton with a back seat nobody sits in. Five seats puts it in the same 90 per cent band as the crew cab, and it makes no difference that the rear bench has held nothing but a tool bag since 2023. Pulling the bench out of an SUV does not fix it either, because the burden of showing the vehicle was adapted sits with you.

Tools, trailers and the equipment in the back sit in different classes, covered in tools and equipment deductions for Ontario trades.

Leases and interest follow the same line

The deductible lease cost for a passenger vehicle is $1,100 a month plus tax on a lease entered into on or after January 1, 2026, unchanged from 2025, with a second restriction where the list price is high. Lease at $1,350 a month and roughly $250 of that is not deductible, so about $3,000 a year of payments never gets claimed. Lease a vehicle that meets the motor vehicle tests and the whole payment is deductible, reduced only for personal use.

Interest on money borrowed to buy a passenger vehicle is capped at $350 divided by 30, multiplied by the days in the fiscal period, which over a 365-day year is $4,258. Borrow $70,000 over five years at 8 per cent and the first year costs roughly $5,170, so about $910 is lost. No such limit applies to a motor vehicle.

The log is what actually decides it

Every test above is a percentage, and a percentage you cannot support is one CRA can reassign. A full log records the date, destination, reason and kilometres of each business trip, plus the odometer at the start and end of the fiscal period. CRA also accepts a simplified method: keep one complete base year, then run a three-month sample in later years and scale it against the same months of the base year. The result has to stay within 10 percentage points of the base year.

Take an electrician whose base year came out at 78 per cent overall and 74 per cent across April to June, with this year's sample for those months at 81 per cent. The calculation is (81 ÷ 74) × 78, or 85 per cent, inside the 68 to 88 per cent band around the base year.

Commuting from home to a fixed shop is personal use, while driving from home straight to a job site, where the home is the business base, is generally business use. Your scheduling software already records the date, address and purpose of every call, which is most of a log and feeds the vehicle cost codes in your job costing system. Record what was in the truck as well as where it went, because the tests turn on carrying goods or equipment.

Where the truck goes home at night

If the corporation owns the vehicle and it goes home with the owner, personal use creates a taxable benefit. Where the vehicle is an automobile under CRA's definition, that is a standby charge of 2 per cent of the original cost per month plus 34 cents per personal kilometre, which on a $62,000 vehicle runs into five figures a year. A pickup or van outside that definition escapes the standby charge.

Fleet is usually the largest deduction on a contractor's return after wages and subcontractors, and it is where our accounting work for contractors tends to start. The ceilings sit on our 2026 rates page.

All of our contractors and trades work

General information only, current at August 2026. Tax rules change and GST/HST status is fact-specific. Confirm your own position before relying on anything here.