Paul is employed as a real estate salesman, selling multimillion dollar homes. He drives a Mercedes S350, which he leases for $1,380 plus 13% tax, per month, to carry out his duties of employment. The lease term is 48 months, commencing January 1, 20X1. The manufacturer’s list price for the Mercedes is $92,500. Paul is required by his employment contract to provide his own car and he does not receive a car allowance or a reimbursement. Income tax reference: ITA 67.3; Reg. 7307.
Determine the maximum car lease payments deductible for tax purposes by Paul for 20X1, assuming that 60% of the kilometres driven by Paul in 20X1 were for employment purposes.