Pickup Trucks and Vans: CRA Passenger Vehicle Rules

A common belief among tradespeople is that a truck is a work vehicle, so the CRA's limits on car costs do not reach it. The opposite belief is that every vehicle is capped. Both are wrong, and the difference can be tens of thousands of dollars of capital cost on one truck.

The Income Tax Act does carve pickups, vans and similar vehicles out of the capped category, but not by type alone. It is a seating test plus a use test, applied in one year: the year you buy or lease the vehicle.

This page quotes the definitions, works one truck both ways, and sorts common vehicles into capped and uncapped.

Three definitions, nested inside each other

Subsection 248(1) of the Income Tax Act defines three terms, and each one sits inside the one before it.

Motor vehicle is the widest: "an automotive vehicle designed or adapted to be used on highways and streets", excluding a trolley bus and a vehicle that runs only on rails. Almost anything you drive for work is a motor vehicle.

Automobile is narrower. Paragraph (a) of the definition makes it:

a motor vehicle that is designed or adapted primarily to carry individuals on highways and streets and that has a seating capacity for not more than the driver and 8 passengers

The definition then lists vehicles that are not automobiles even though they would otherwise fit: ambulances, clearly marked police, fire and emergency medical vehicles, a vehicle acquired primarily for use as a taxi, a bus used in a passenger transport business, a hearse, dealer and rental stock, and the three van and pickup exceptions quoted in the next section.

Passenger vehicle is an automobile acquired, or leased under a lease entered into, after June 17, 1987, other than a zero-emission vehicle. In practice, every automobile you buy or lease is a passenger vehicle, unless it is a zero-emission vehicle you own (fully electric, hydrogen, or a qualifying plug-in hybrid), which has its own classes and its own limits (see electric vehicles for business use). This page is about everything else.

So the question "is my truck a passenger vehicle?" is really "is my truck an automobile?", and for a pickup or van that turns on paragraph (e).

The three exceptions, in the Act's words

Paragraph (e) of the automobile definition excludes a motor vehicle:

(i) of a type commonly called a van or pick-up truck, or a similar vehicle, that has a seating capacity for not more than the driver and two passengers and that, in the taxation year in which it is acquired or leased, is used primarily for the transportation of goods or equipment in the course of gaining or producing income,

(ii) of a type commonly called a van or pick-up truck, or a similar vehicle, the use of which, in the taxation year in which it is acquired or leased, is all or substantially all for the transportation of goods, equipment or passengers in the course of gaining or producing income, or

(iii) of a type commonly called a pick-up truck that is used in the taxation year in which it is acquired or leased primarily for the transportation of goods, equipment or passengers in the course of earning or producing income at one or more locations in Canada that are (A) described, in respect of any of the occupants of the vehicle, in subparagraph 6(6)(a)(i) or (ii), and (B) at least 30 kilometres outside the nearest point on the boundary of the nearest population centre, as defined by the last census dictionary published by Statistics Canada before the year, that has a population of at least 40,000 individuals as determined in the last census published by Statistics Canada before the year

Read slowly, each one has its own seating rule, its own use threshold and its own list of what the use has to be for.

Exception	Vehicle	Seating	Use in the year acquired or leased	What the use must be
(e)(i)	Van, pickup or similar	Driver plus no more than 2	Primarily (the CRA reads this as more than 50%)	Carrying goods or equipment to earn income
(e)(ii)	Van, pickup or similar	Any seating an automobile can have (up to the driver plus 8)	All or substantially all (the CRA reads this as 90% or more)	Carrying goods, equipment or passengers to earn income
(e)(iii)	Pickup only	Any seating an automobile can have	Primarily (more than 50%)	Carrying goods, equipment or passengers to earn income at a remote location or special work site at least 30 km from a population centre of 40,000 or more

The two percentages are the CRA's readings, stated on its "Type of vehicle" page and in Guide T4002: "used more than 50% to transport goods and equipment" for the first exception, and "used 90% or more to transport goods, equipment, or passengers" for the second.

Four details that decide real cases

The year is fixed. Every exception looks at use "in the taxation year in which it is acquired or leased". It is one test, applied once. A truck that passed stays outside the definition when later use drops, and a truck that failed stays a passenger vehicle when later use rises.

Passengers count in only two of the three. The two-seat exception in (e)(i) counts goods or equipment only. The broader (e)(ii) and the remote-site (e)(iii) also count passengers carried to earn income.

SUVs are not named. The Act says "a van or pick-up truck, or a similar vehicle". The CRA's vehicle definition chart applies the 90% test to sport utility vehicles with four to nine seats, which treats an SUV as a similar vehicle for (e)(ii). Sedans, coupes, station wagons and sports cars are passenger vehicles in that chart at any level of business use.

Nine seats is the edge of the whole definition. An automobile seats "not more than the driver and 8 passengers". A van that seats more than that is not an automobile at all, so it is never a passenger vehicle, whatever it is used for.

The remote-site exception

Subparagraph (e)(iii) is narrow. The locations it points to in 6(6)(a) are a special work site, where the duties are temporary and the worker keeps a home elsewhere that is too far to return to daily, and a location so remote from any established community that a worker could not reasonably be expected to set up a home there. The site also has to be at least 30 kilometres outside the nearest population centre of 40,000 or more. It covers pickups only, not vans, and the use threshold is primarily rather than substantially all. Think of a pickup hauling a crew and gear to a mine or a work camp.

What escaping the definition changes

Three limits in the Act are written for "passenger vehicles". A vehicle that is not one is not subject to any of them.

The capital cost ceiling and Class 10.1. Paragraph 13(7)(g) deems the capital cost of a passenger vehicle to be no more than the prescribed amount, and Schedule II of the Income Tax Regulations puts a passenger vehicle that costs more than that amount into Class 10.1. The prescribed amount is $39,000 for a passenger vehicle acquired in 2026, before sales tax. A pickup or van outside the definition goes into Class 10 at its full cost, with no ceiling.

The lease cap. Section 67.3 limits the deductible lease charges on a passenger vehicle to the lesser of two formulas, one built on a monthly amount ($1,100 a month before tax for a lease entered into in 2026) and one on the vehicle's list price. A leased van or pickup outside the definition has no such cap, and you deduct the business-use share of the actual lease payments. The formulas are worked in leased vehicle expenses for the self-employed.

The interest cap. Section 67.2 limits deductible interest on money borrowed to buy a passenger vehicle to a daily amount built on a monthly figure, $350 a month for a vehicle acquired in 2026. Interest on a loan for a vehicle outside the definition is not capped this way. See car loan interest for the calculation.

Both classes deduct at 30%. What differs is the amount the 30% applies to, and what happens on a sale. Each Class 10.1 vehicle is its own class, and Guide T4002 states that recapture and terminal loss do not apply to it, so the cost above the ceiling is never deducted. A Class 10 vehicle sits in the ordinary pool, where a sale can produce recapture, or a terminal loss if nothing is left in the class.

Class 10.1 also does not catch everything. A passenger vehicle costing the ceiling or less before tax goes into Class 10 too, so for a cheaper truck the escape changes only interest and leasing. It is worth the most on an expensive vehicle that is financed or leased.

What it does not change

You still claim only the business share. On the T2125, every vehicle expense, including capital cost allowance and interest, goes through the same arithmetic: business kilometres divided by total kilometres, applied to the year's costs. A Class 10 truck used 70% for business in a later year gets 70% of its costs. Being outside the passenger-vehicle definition does not make it a 100% vehicle. How the percentage is built, and what distorts it, is covered in how to calculate your business-use percentage.

You still need a log, and the first year's log does double duty. The CRA asks for the date, destination, purpose and distance of each business trip, and the odometer reading at the start and end of the fiscal period, for each vehicle (what a CRA logbook has to contain). For a truck you are treating as outside the definition, the log for the year you bought or leased it is also the evidence for the 50% or 90% test. It is the only year that test looks at, and you cannot rebuild it later with any confidence. A purpose field that says what was carried ("drywall to the Main Street job", "crew and tools to site") is what connects a trip to "transportation of goods, equipment or passengers".

Claimable Drive, in beta for iPhone, records drives in the background, you swipe each one business or personal, and it works out the business-use percentage from those swipes.

Worked example: one truck, two first years

A self-employed renovator in Alberta, not registered for GST, buys a crew-cab pickup (driver plus four passengers) on March 1, 2026. The price is $62,000 before tax. Alberta has no provincial sales tax, so the only tax is 5% GST, $3,100, and the total is $65,100. She finances it, and the loan interest for the 306 days from March 1 to December 31, 2026 is $4,000.

Because the truck seats more than the driver and two passengers, only exception (e)(ii) can apply, so the question is whether 90% or more of its 2026 use was carrying goods, equipment or passengers to earn income.

Version A. Her 2026 log shows 93% of the kilometres were job-site trips carrying tools, materials and crew, the rest personal. The truck is not an automobile, so it is not a passenger vehicle.

Version B. Her 2026 log shows 85% such trips, the rest personal. The truck is a passenger vehicle, and because it cost more than the ceiling, it goes into Class 10.1.

	Version A: 93% in 2026	Version B: 85% in 2026
What the truck is	Motor vehicle, not a passenger vehicle	Passenger vehicle
CCA class	Class 10 (30%)	Class 10.1 (30%), its own class
Capital cost entering the class	$65,100	$40,950 ($39,000 ceiling for 2026, plus 5% GST of $1,950)
2026 interest before the business share	$4,000	$3,570 ($350 × 306 ÷ 30)
Share of 2026 costs claimed	93%	85%
On a later sale	Recapture or terminal loss can arise	No recapture or terminal loss

The capital cost gap is $65,100 minus $40,950, or $24,150. In Version A it sits in the Class 10 pool and is deducted over the years (at each year's business-use percentage) through CCA or a terminal loss. In Version B it is never deductible.

The interest limit in Version B is $350 × 306 ÷ 30 = $3,570, which is less than the $4,000 actually paid, so $430 of 2026 interest is lost before the business share is even applied. In later years the cap is $350 a month for a vehicle acquired in 2026, prorated by days, for as long as the loan runs.

Version A still claims 93% of every cost, not 100%. And the whole difference between the columns came from one number in one year's log, which is the number Version A could not prove without that log.

Common vehicles, sorted

"Year acquired" below means the tax year you bought or leased the vehicle. Percentages are use for carrying goods, equipment or (where the exception allows it) passengers to earn income, in that year.

Vehicle and use	Result	Why
Sedan, coupe or station wagon, any business use	Passenger vehicle	An automobile, and the exceptions cover only vans, pickups and similar vehicles
Regular-cab pickup (driver plus 2), 60% hauling materials in the year acquired	Not a passenger vehicle	(e)(i): two passengers or fewer, used primarily for goods or equipment
Cargo van (driver plus 2), 75% delivering stock in the year acquired	Not a passenger vehicle	(e)(i)
Crew-cab pickup (driver plus 4), 92% carrying crew and tools in the year acquired	Not a passenger vehicle	(e)(ii): all or substantially all
Crew-cab pickup (driver plus 4), 80% business in the year acquired	Passenger vehicle	Fails (e)(ii), and (e)(i) is closed to it by the seating
Crew-cab pickup, 95% business in a later year but 80% in the year acquired	Passenger vehicle	The test looks only at the year acquired
Five-seat SUV, 95% carrying equipment in the year acquired	Not a passenger vehicle	The CRA's chart applies (e)(ii) to SUVs as a similar vehicle
Seven-seat minivan, 90% or more carrying passengers for income in the year acquired	Not a passenger vehicle	(e)(ii) counts passengers
Van seating the driver plus 11	Not a passenger vehicle	Seats more than the driver plus 8, so not an automobile at all
Crew-cab pickup, 60% carrying a crew and gear to a camp 200 km from any population centre of 40,000	Not a passenger vehicle, if the camp is a special work site or remote location	(e)(iii)

FAQ

Is a pickup truck a passenger vehicle for the CRA? It depends on its seating and how it was used in the tax year you bought or leased it. A pickup seating the driver and two passengers is outside the definition if it was used more than 50% to carry goods or equipment to earn income that year. Any pickup is outside it if it was used 90% or more to carry goods, equipment or passengers to earn income that year. Otherwise, it is a passenger vehicle, like a car.

What does "all or substantially all" mean? The Act does not define it. The CRA's reading, stated on its "Type of vehicle" page and in Guide T4002, is 90% or more.

Class 10 or Class 10.1 for my pickup or van? Class 10 if it is not a passenger vehicle. If it is a passenger vehicle, Class 10 if it cost the ceiling or less before tax ($39,000 for one acquired in 2026) and Class 10.1 if it cost more. The capital cost allowance guide covers how each class is deducted over time.

My business use dropped after the first year. Does the truck become a passenger vehicle? No. Each exception is tested "in the taxation year in which it is acquired or leased". Later years change your business-use percentage, and so the share of costs you claim, but not the vehicle's status.

If my truck is not a passenger vehicle, can I deduct 100% of its costs? Only if 100% of its kilometres are business kilometres. The business-use calculation applies to every vehicle on the T2125. Escaping the definition removes the ceilings on capital cost, lease charges and interest, not the personal-use share.

Sources

1. Income Tax Act, section 248, the 248(1) definitions of "automobile", "motor vehicle" and "passenger vehicle".
2. Income Tax Act, section 6, 6(6)(a)(i) and (ii), the special work site and remote location.
3. Income Tax Act, section 13, 13(7)(g), the capital cost ceiling.
4. Income Tax Act, section 67.2, the interest limit.
5. Income Tax Act, section 67.3, the lease limit.
6. Income Tax Regulations, Schedule II, Classes 10 and 10.1.
7. Income Tax Regulations, section 7307, the prescribed amounts.
8. Department of Finance Canada, Government Announces the 2026 Automobile Deduction Limits and Expense Benefit Rates for Businesses, January 14, 2026, the 2026 ceiling, lease and interest amounts.
9. CRA, Type of vehicle, the "more than 50%" and "90% or more" readings and the vehicle definition chart.
10. CRA Guide T4002, Self-employed Business, Professional, Commission, Farming, and Fishing Income, Classes 10 and 10.1, and no recapture or terminal loss on Class 10.1.
11. CRA, Motor vehicle records, logbook contents.