Does the input tax credit limit on vehicles apply if my business leases instead of buys the car?

Yes, leasing a passenger vehicle doesn't get around the restriction; it's applied through a comparable mechanism built around a prescribed monthly lease-cost ceiling instead of the purchase-price ceiling used for a bought vehicle. Where the lease payments exceed that prescribed monthly amount, the input tax credit available on the excess portion of the HST paid on those lease payments is generally restricted in much the same spirit as the purchase-price limit, the government didn't want businesses simply leasing their way around the cap that applies to buying an expensive vehicle outright.

This means a business considering whether to lease or buy a higher-end vehicle for tax reasons shouldn't assume leasing avoids the input tax credit restriction altogether, the mechanics differ between a lease and a purchase, but the underlying policy of capping the tax benefit on an expensive passenger vehicle applies either way. The comparison between leasing and buying should be made on the actual after-tax cost in each scenario, not on an assumption that one method escapes the limit entirely.

Because the specific lease-cost ceiling and how the restriction is calculated can be technical, and the figures are periodically adjusted, confirm the current numbers and the comparison for your specific vehicle and lease terms with your accountant before deciding.