What is the difference between a motor vehicle and an automobile for CRA purposes?

The CRA distinguishes between "automobiles" and "motor vehicles" because different rules and CCA classes apply to each. An automobile is defined in the Income Tax Act as a motor vehicle designed to carry people on highways and streets, capable of seating fewer than nine passengers. Most personal cars and SUVs are automobiles.

Certain vehicles fall outside the "automobile" definition and are treated as general motor vehicles: vans, pick-up trucks, or similar vehicles used more than 50% for transporting goods, equipment, or passengers for business; hearses and ambulances; and vehicles designed to seat ten or more. Motor vehicles that are not automobiles are not subject to the same federal cost caps for CCA and have different maximum monthly lease deduction limits.

Why does this matter? If your vehicle qualifies as a motor vehicle rather than an automobile, you can potentially use a different (sometimes more favorable) CCA class and avoid the prescribed cost ceiling that limits deductions on expensive passenger cars. If you drive a cargo van or pickup that carries tools and equipment for your business, it may qualify for more favorable treatment. Checking the classification of your specific vehicle with a tax professional is worthwhile.