Torben Robertson

CRA sets new per kilometre rate for 2022

For Canadian employers, the new year brings a new per kilometre reimbursement rate. In 2022, the new Canada Revenue Agency rate is set at ¢61.

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The Canada Revenue Agency (“CRA”) has updated their per kilometre recommended reimbursement rates for 2022. This year, the CRA automobile allowance rate is ¢61 per kilometre.

¢61 is the recommended rate per kilometre for the first 5,000 kilometres driven; the recommendation is ¢55 per kilometre after that.

An additional ¢4 per kilometre is recommended in the Northwest Territories, Yukon, and Nunavut.

The 2022 ¢2 increase is the first rate hike in two years, and the most significant since 2019, when it increased by ¢3 over 2018.

The rates for 2021 were:

  • 59¢ per kilometre for the first 5,000
  • 53¢ per kilometre driven post-5,000

The rates for 2020 were:

  • 53¢ per kilometre driven after that

In both 2021 and 2020, the ¢4 Northern bonus was the same.

What do these rates mean for companies and drivers?

If you are a business owner in Canada, and you reimburse your drivers at the CRA mileage rate, you do not need to deduct anything from the repayment. Employers in Canada normally deduct CPP, EI, and income tax from paycheques. These contributions need not be deducted from reasonable reimbursements.

The CRA acknowledges that many employees use their personal vehicle for business purposes. Just as a carpenter needs to bring a saw to work, so is a car a necessary business expense for many workers. The CRA therefore permits deduction-free reimbursements, as if these were top-line business expenses.

Drivers benefit from reimbursement programs because it simplifies their workload. Some workers—who are not paid reimbursements by their employer but who drive their own car for work—calculate their own vehicle expenses at tax time. This process is more laborious for employees than submitting reimbursable mileage to their employer.

To determine their rate recommendation, the CRA estimates how much it costs to drive a car one kilometre. While we do not have insight into their exact calculation, we can tell you how Cardata calculates mileage costs for their clients. Cardata looks at the following fixed and variable expenses when determining reimbursements:

  • Depreciation
  • Fuel prices
  • Repair & maintenance costs
  • Insurance premiums
  • License and Registration fees

The figure has increased more dramatically this year likely due to the rising costs of goods and services.

Because all vehicles have different expenses in each of these categories, ¢61 is an average. This is disadvantageous for business owners and for drivers. As an average, the figure necessarily over- or under-reimburses most workers.

Who uses cents per kilometre?

Cardata employs these recommendations for clients who reimburse using the cents per kilometre method. A cents per kilometre plan is ideal for companies whose drivers’ business travel is occasional. For other clients, whose sales teams are constantly on the road, more cost-effective solutions exist.

Want to learn more about reimbursement solutions? Read about all the ways to reimburse employee-owned fleets here!

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Line 25500 - Determine your maximum deduction

The maximum deduction you can claim for each eligible trip is the lowest of the following three amounts:

  • either the  taxable travel benefits you received from employment for the trip or the portion of the $1,200 standard amount for the person travelling (you or your eligible family member) that you allocate to the trip (enter the amount for whichever option you choose in Step 3 , Chart B – column 3 of Form T2222 )

You can use the value of taxable travel benefits provided by your employer in the calculation in Step 3 if you meet both of the following conditions:

  • You are an employee dealing at arm's length with your employer
  • You had to include in your income (in the same year you have the travel expenses) the taxable travel benefits that you received from your employment in a prescribed zone

If you take a trip that begins and ends in one year and you are reimbursed the following year, you cannot claim the travel deduction for that trip. However, you can claim a travel deduction if you leave on a trip in one year and return the next year.

For example, you may leave on a trip in December and come back in January. If you receive non-refundable tickets or travel vouchers, the taxable travel benefit should be included in your T4 or T4A slip for the year the trip begins.

  • the total travel expenses paid for the trip (enter the amount in Step 3 , Chart B  – column 4 of Form T2222 )
  • the cost of the lowest return airfare available at the time of the trip between the airport closest to your residence and the nearest designated city to that airport (enter the amount in Step 3 , Chart B – column 5 of Form T2222 )

If you or an eligible family member uses the standard amount to calculate a travel deduction in the year, $1,200 is the maximum total amount that may be claimed for each individual who travels, for all trips taken in the year by that individual.

Regardless of whether you or an eligible family member is claiming the travel deduction and whether trips were medical or non-medical , it is an amount per person, not per trip.

If you or an eligible family member uses the taxable travel benefit received from employment to calculate a travel deduction in a year for an individual, then no one (including the individual) can use any part of their $1,200 standard amount in calculating a travel deduction claim for any trip taken by that individual in that year.

You can claim a travel deduction even if you are not claiming a residency deduction. For example, if your spouse or common-law partner claims both the basic and the additional residency amounts, you can still claim a travel deduction.

You cannot claim a travel deduction if either of the following applies:

  • You or your eligible family member received or was entitled to receive non-taxable amounts as travel assistance, as a travel allowance, or as a reimbursement for travel expenses
  • Someone else has already claimed the travel deduction for this trip on their return

How many trips can you claim

You can claim up to two trips  taken for non-medical reasons and up to two trips taken by each eligible family member.

You can also claim any number of medical trips taken by you or an eligible family member. However, no more than two non-medical trips taken by any individual (themself or an eligible family member) in a year can be claimed by all taxpayers combined.

Taxable travel benefits

Taxable travel benefits include:

  • travel assistance, such as airline tickets or a trip on a company-owned airplane
  • a travel allowance or lump-sum payment you received from your employer for travel expenses you incurred

Payments from your employer for travel that was not for employment purposes are generally considered taxable benefits. Box 32 of your T4 slip or box 028 of your T4A slip shows the taxable travel benefits you received in the year. This includes the benefits received specifically for medical travel which are shown in box 33 of your T4 slip or box 116 of your T4A slip .

You can use the benefit for medical travel in the calculation in Step 3, Chart B – column 3 of Form T2222 only if the medical services were for you or an eligible family member and were not available where you lived.

If you received a benefit that was not for any particular trip, you have to split it reasonably between the trips you are claiming.

Travel expenses

Travel expenses include:

  • air, train, and bus fare
  • vehicle expenses
  • hotel or motel accommodations
  • camping fees
  • other incidental expenses such as taxis and road or ferry tolls

To calculate meal and vehicle expenses, you may choose the detailed or simplified method. Your total travel expenses equal the total of the value of travel assistance provided by your employer and the travel expenses incurred by you. Include any travel expenses paid by your employer. For more information about the detailed or simplified methods including the different rates, go to Meal and vehicle rates used to calculate travel expenses for 2023  or call 1-800-267-6999 .

If you are claiming expenses for a medical trip on Form T2222 , no one (including you) can claim them as medical expenses on their return.

In cases of medical travel, if the patient needs an attendant while travelling, the attendant's travel expenses are included as part of the patient's total travel expenses. This includes travel assistance provided by your employer or actual expenses you incurred.

If the attendant was you or an eligible family member: Include the cost of the attendant's lowest return airfare in Step 3 , Chart B – column 5 of Form T2222 , as part of the patient's expense for airfare. Include the cost of the attendant's travel expenses (excluding airfare) in column 4 , as part of the patient's travel expenses.

If the attendant was not you or an eligible family member: Do not include the cost of the attendant's lowest return airfare in column 5 as part of the patient's expense for airfare. Include the cost of the attendant's travel expenses (including airfare) in column 4 as part of the patient's travel expenses.

Lowest return airfare (LRA)

The LRA available at the time of the trip means the LRA ordinarily available for regularly scheduled commercial flights (excluding promotions or discounts that are not ordinarily available) on the date that the travel began. The airfare includes any airport tax, as well as goods and services tax / harmonized sales tax and provincial sales tax. Additional charges, such as flight cancellation insurance, meals, and baggage surcharges are not considered part of the lowest return airfare.

To complete  column 5 in Chart B  of  Form T2222 , Northern Residents Deductions , you must submit a lowest return airfare. To determine that airfare, you can use one of the following methods:

  • Use the cost of airfare for a round trip from the airport closest to your residence to the nearest designated city. In case the Canada Revenue Agency (CRA) asks for proof of the cost, keep your receipts and any supporting documents.
  • Use the amount in the lowest return airfare table which corresponds to your travel date and the airport closest to your residence. With this option, you do not need to have an airfare quote or any receipts or supporting documents.

Example 1 – Using the airfare table

Charlie has been living in Rankin Inlet, Nunavut, for the past three years. They travelled from Rankin Inlet to Iqaluit, Nunavut, to visit family on February 28 and returned on March 16 .

To calculate the travel deduction, Charlie needs to first figure out the three required amounts and enter them on Form T2222 . The cost of their flights was $1,633 and they did not have any other travel expenses. Charlie received a taxable travel benefit from their employer of $1,000.  Since Charlie did not take any other trips in the same year, they decide to use the full $1,200 standard amount instead of the taxable travel benefit they received from their employer, because that benefit is less than the $1,200 standard amount. Although Charlie did not travel to the nearest designated city nor did they leave the territory, they still have to determine the lowest return airfare (LRA) at the time of their trip. Charlie did not obtain a quote before they traveled. However, Charlie checks the table and uses the airfare table amount. The airfare table amount for Rankin Inlet to Winnipeg is $3,143.

Now that Charlie has obtained the three amounts, they can calculate their travel deduction. The maximum that Charlie can claim is the lowest of the following three amounts:

  • the taxable travel benefit they received from their employer for the trip or the part of the $1,200 standard amount that Charlie allocated to that trip ($1,200)
  • the total travel expenses paid for the trip ($1,633)
  • the LRA available at the time of the trip between the airport closest to their residence and the nearest designated city to that airport ($3,143)

The CRA would accept Charlie’s amount for the LRA, because they chose to use the airfare table amount.

They will claim $1,200 for their trip, because it is the lowest of the three amounts.

Example 2 – Travelling by charter

Alex has always lived in Aklavik, Northwest Territories . They travel to Edmonton, Alberta, for a vacation and it is the only trip they take in the year. Alex can only travel from Aklavik by charter. The cost of the charter flights to the nearest commercial airport in Inuvik and back was $2,600. The cost of the flights from Inuvik to Edmonton and back was $1,210. Edmonton also happens to be the nearest designated city when flying from Inuvik. Alex spent an additional $1,000 for travel expenses in Edmonton. Alex received $2,000 as a taxable travel benefit from their employer.

To calculate the travel deduction, Alex needs to first figure out the three required amounts and enter them on Form T2222 . Since the taxable travel benefit Alex received from their employer is greater than the $1,200 standard amount, they decide to claim the taxable travel benefit. Alex bought economy tickets for the flights from Inuvik to Edmonton and back. Alex’s total flight expenses were $3,810. Their total travel expenses were $4,810.

Since Alex has all of the information they need, they can calculate their travel deduction. The maximum that Alex can claim is the lowest of the following three amounts:

  • the taxable travel benefit they received from their employer for the trip or the portion of the $1,200 standard amount that Alex allocated to that trip ($2,000)
  • the total travel expenses paid for the trip ($2,600 + $1,210 + $1,000 = $4,810)
  • the lowest return airfare (LRA) available at the time of the trip, between the airport closest to his residence and the nearest designated city to that airport ($2,600 + $1,210 = $3,810)

The CRA would accept the amount of $3,810 as the LRA, because the charter flight was to the nearest commercial airport and the flight from Inuvik to Edmonton was to the nearest designated city. If Alex is selected for review, they will need to provide their receipts for the flights to support their claim for the LRA.

Alex claims $2,000 for this trip, because it is the lowest of the three amounts.

Example 3 – Quote obtained before the day of travel

Chris has lived in Dawson City , Yukon, for the past 10 years. They drove to Whitehorse, Yukon, for a vacation and it is the only trip they took during the year. Chris left Dawson City on July 26 and returned on August 9 . From their employer, Chris received a taxable travel benefit of $2,000 for their trip, and the total cost of their trip was $1,500.

Since Chris’s taxable travel benefit received from their employer is greater than the $1,200 standard amount, they decide to claim the taxable travel benefit. Even though Chris did not fly for their trip, and they did not leave the territory, they still have to determine the lowest return airfare (LRA). Chris got a quote before they left for their trip. They went online July 19 and got a quote of $1,000 for the lowest return airfare for July 26 (the day their trip began) to the nearest designated city.

  • the taxable travel benefit they received from their employer for the trip or the portion of the $1,200 standard amount that Chris allocated to that trip ($2,000)
  • the total travel expenses paid for the trip ($1,500)
  • the LRA available at the time of the trip, between the airport closest to their residence and the nearest designated city to that airport ($1,000)

The CRA would accept the amount of $1,000 for the LRA, because the quote for the flight was for the lowest return airfare to the nearest designated city. If Chris was selected for review, they would need to send their documents to support their claim for the LRA.

Chris claims $1,000 for this trip, which is the lowest of the three amounts.

Example 4 – Using an economy return airfare

Taylor has lived in Fort McMurray , Alberta, for two years. They decided to go to Edmonton, Alberta, for a vacation in March and it was the only non-medical trip they took in the year. Taylor decided to fly business class instead of economy. Their ticket cost $1,440 and their total expenses for the trip were $2,100. From their employer, Taylor received $1,500 as a taxable travel benefit for their trip. As Taylor did not get a quote for the lowest return airfare (LRA), and the actual cost of the flight they took was not economy class, Taylor claims the airfare table value of $894 for the LRA.

Taylor decides to claim the taxable travel benefit, because the $1,500 they received from their employer is greater than the $1,200 standard amount.

Since Taylor has all the information they need, they can calculate their travel deduction. The maximum that Taylor can claim is the lowest of the following three amounts:

  • the taxable travel benefit they received from their employer for the trip or the portion of the $1,200 standard amount that Taylor allocated to that trip ($1,500)
  • the total travel expenses paid for the trip ($2,100)
  • the LRA available at the time of the trip, between the airport closest to their residence and the nearest designated city to that airport ( Taylor claims the table value for the LRA of $894 , rather than incorrectly claiming the cost of their business class tickets.)

Taylor claims $894 for this trip, because it is the lowest of the three amounts.   

Since Taylor lives in a prescribed intermediate zone, their total travel deduction is one-half ($447) of the total of the lowest amounts for each trip they took ($894) .

Forms and publications

  • Income Tax Package
  • Form T2222, Northern Residents Deductions

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Understanding the CRA Mileage Rate for 2024

The cra mileage rate, or automobile allowance, has been set for 2024..

revenue canada travel allowance per km 2022

Navigating the complexities of Canada Revenue Agency's (CRA) mileage rates is crucial for both business owners and employees in Canada. As we enter 2024, understanding these rates and their implications is more important than ever. This post delves into the updated CRA mileage rates for 2024, highlighting the changes and their impact on business and personal tax planning.

revenue canada travel allowance per km 2022

2024 CRA Mileage Rate

In 2024, the CRA has updated its mileage rates to 70 cents per kilometre for the first 5,000 kilometres driven and 64 cents thereafter.

This bifurcation reflects an understanding of vehicle operation costs. The additional 4 cents per kilometre allowance in northern regions addresses the higher costs in these areas. This section will explore the rationale behind these figures, providing a deeper understanding of how these rates are determined and their relevance to vehicle operation costs across different Canadian regions.

The CRA's mileage rates are designed to reflect the average costs of operating a vehicle, including factors like fuel prices, maintenance, insurance, and depreciation. The rate of 70 cents per kilometre for the first 5,000 kilometres can be seen as an estimate of these costs for the average Canadian driver. This initial rate is slightly higher as it tends to incorporate the fixed costs of vehicle ownership, which do not significantly vary with the amount of driving.

Beyond the initial 5,000 kilometres, the rate decreases to 64 cents per kilometre. This reduction acknowledges that the variable costs (like fuel and maintenance) become the more dominant factors in vehicle operation costs as one drives more, and these costs increase at a slower rate than the fixed costs.

The additional 4 cents per kilometre allowance for the northern regions of Canada (Northwest Territories, Yukon, and Nunavut) takes into account the higher operational costs in these areas. Factors contributing to these increased costs include harsher driving conditions, longer distances, and higher fuel prices.

By understanding these aspects, it becomes clear how the CRA's mileage rates are not just arbitrary figures, but are carefully calculated estimates reflecting the real costs associated with vehicle operation across different regions in Canada.

CRA Mileage Eligibility and Requirements

To qualify for the CRA mileage rate, it's crucial to meet certain criteria and maintain detailed records. Accurate record-keeping is essential for compliance and to support claims. The records should include the date of each trip, the destination, the purpose of the trip, and the number of kilometres driven.

This documentation is vital as it provides the CRA with clear evidence of the business use of the vehicle. It's important to note that these records should be maintained regularly and be readily available if requested by the CRA.

This meticulous approach to documentation not only ensures compliance with tax regulations but also facilitates the smooth processing of claims.

revenue canada travel allowance per km 2022

Comparison with Previous Years

When we compare the 2024 rates with those of previous years, there's a noticeable trend of adjustment in response to economic factors. This section will provide a detailed comparison with past years, offering insights into the evolving nature of mileage rates in Canada.

In this section, we'll analyze the CRA mileage rates from the past decade (2014-2024) and explore how external factors like inflation and fuel prices have influenced these adjustments.

Historical CRA Mileage Rates

  • 2024 : 70¢/km for the first 5,000 km, then 64¢/km. Additional 4¢/km in northern regions.
  • 2023 : 68¢/km for the first 5,000 km, then 62¢/km. Additional 4¢/km in northern regions.
  • 2022 : 61¢/km for the first 5,000 km, then 55¢/km. Additional 4¢/km in northern regions​​​​.
  • 2021 and 2020 : 59¢/km for the first 5,000 km, then 53¢/km. Additional 4¢/km in northern regions​​.
  • 2019 : 58¢/km for the first 5,000 km, then 52¢/km. Additional 4¢/km in northern regions​​.
  • 2018 : 55¢/km for the first 5,000 km, then 49¢/km. Additional 4¢/km in northern regions​​.
  • 2016 and 2017 : 54¢/km for the first 5,000 km, then 48¢/km. Additional 4¢/km in northern regions​​.
  • 2015 : 55¢/km for the first 5,000 km, then 49¢/km. Additional 4¢/km in northern regions​​.

Influence of External Factors

  • Inflation : Inflation significantly impacts mileage rates as it affects the overall cost of living and operating expenses. As inflation rises, so do the costs associated with vehicle operation, including maintenance, repairs, and insurance. This is reflected in the gradual increase in mileage rates over the years.
  • Fuel Prices : Fuel prices are a major component of vehicle operating costs. Fluctuations in oil prices directly impact these rates. For instance, years with higher fuel prices often see an increase in mileage rates to compensate for the additional costs borne by motorists.
  • Economic Conditions : Broader economic conditions also play a role. For example, during periods of economic downturn, the CRA might opt for more conservative adjustments to the mileage rates.
  • Regional Variations : The additional allowance for northern regions acknowledges the unique challenges and higher costs of vehicle operation in these areas, such as harsher driving conditions and longer distances.

By examining these rates over the past decade, we can see a trend of gradual increases, aligning with the rising costs of vehicle operation. This historical perspective offers valuable insights into the CRA's approach to adjusting mileage rates in response to changing economic conditions.

revenue canada travel allowance per km 2022

Implications for Business Owners and Employees

The updated CRA mileage rates for 2024 carry significant implications for both business owners and employees in Canada. Understanding and effectively applying these rates can lead to more accurate budgeting, financial forecasting, and tax optimization. Here's a deeper dive into these implications and practical advice for both groups:

For Business Owners

Budgeting and Financial Forecasting

  • Incorporate Updated Rates into Budgets : Business owners need to update their financial plans to incorporate the new mileage rates. This ensures that the budget for employee reimbursements is accurate and reflective of current costs.
  • Tax Planning : Understanding these rates is also crucial for tax planning. The reimbursement paid to employees at these rates is tax-deductible for the business, which can be a significant factor in annual tax calculations.

Employee Reimbursement Policies

  • Review and Update Reimbursement Policies : It’s important to review and update the company's reimbursement policies to align with the new rates. This helps in maintaining transparency and fairness in employee compensation.
  • Communication with Employees : Clearly communicate any changes in the reimbursement policy to the employees. This ensures that there are no misunderstandings and that employees are aware of their entitlements.

Leveraging Technology for Accuracy

  • Use of Mileage Tracking Tools : Implementing tools like mileage tracker apps can greatly enhance the accuracy of mileage records, ensuring that reimbursements are based on precise data.

For Employees

Maximizing Reimbursements

  • Understand Your Entitlements : Employees should be aware of the updated rates and understand how they apply to their business travel. This knowledge is crucial for ensuring that they're reimbursed accurately for business use of their personal vehicle.

Tax Deductions

  • Record Keeping for Tax Purposes : Keeping detailed records of business-related travel is essential. This documentation will support claims for deductions when filing personal tax returns.
  • Seeking Professional Advice : Consulting with a tax professional can help employees understand how to maximize their deductions related to business travel.

Negotiating with Employers

  • Discuss Reimbursements : If the employer’s current reimbursement policy does not align with the CRA rates, employees might consider discussing this with their employer to negotiate a fair reimbursement scheme.

By taking these steps, both business owners and employees can effectively navigate the financial landscape shaped by the CRA’s updated mileage rates. For business owners, it’s about ensuring accurate budgeting and compliance, while for employees, it’s about securing fair reimbursement and optimizing tax deductions.

revenue canada travel allowance per km 2022

Best Practices for Tracking Your Kilometres

Effective mileage tracking is crucial for leveraging the CRA rates. This section offers guidance on best practices for logging business kilometres, including both traditional methods and digital solutions.

Traditional Methods

  • Manual Logbooks : Keeping a physical logbook in the vehicle to record each trip can be a simple yet effective method. Ensure to note the date, destination, purpose, and number of kilometres for each business trip.
  • Receipts and Calendar Notes : Collecting fuel receipts and using calendar entries can supplement mileage logs, providing additional proof for business travels.

Digital Solutions

Mileage Tracker Apps : Apps like Everlance automate mileage tracking, using GPS to accurately record distances traveled for business purposes.

Features of Digital Trackers :

  • Automatic Trip Detection : These apps often detect trips automatically, reducing the need for manual entries.
  • Classification of Trips : Users can classify trips as business or personal, making it easier to segregate mileage for reimbursement or tax purposes.
  • Reporting : Digital trackers provide detailed reports that can be used for reimbursement claims or tax filing.
  • Cloud Storage : Data is stored in the cloud, ensuring that mileage records are secure and accessible when needed.

revenue canada travel allowance per km 2022

Staying informed about the CRA mileage rates is crucial for more than just compliance; it's about making informed financial decisions. By understanding and applying these rates correctly, individuals and businesses can optimize their tax benefits and financial planning.

Importance of Staying Updated

  • Regular Review of CRA Announcements : Keep an eye on updates from the CRA, as rates can change annually.
  • Adapting to Economic Changes : Recognize that these rates are influenced by economic factors, and adjustments may be necessary in your financial planning.

Planning for the Future

  • Anticipating Changes : Be proactive in anticipating potential changes in mileage rates and plan accordingly.
  • Consulting Professionals : Consider consulting with financial or tax professionals for personalized advice and strategies.

Encouraging Proactive Measures

  • Educational Resources : Utilize educational resources and tools to stay informed about mileage rates and their implications.
  • Engaging with Financial Advisors : Engage with financial advisors or accountants for tailored advice suited to individual or business needs.

In conclusion, the importance of staying informed and proactive regarding CRA mileage rates cannot be overstated. It's a key element in effective financial management and planning for both individuals and businesses in Canada.

revenue canada travel allowance per km 2022

Brad Thibeau

Brad Thibeau is the Head of Platform Partnerships at Everlance, focusing on helping self employed people save time and money on their taxes. Previous to Everlance, Brad spent his career at the cross section of tech and finance with key roles at companies like Drizly, CarGurus, and Morgan Stanley. Brad holds a bachelor's degree in Financial Management from Husson University.

  • How does Everlance work?

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  • Complete Guide To CRA Mileage Rate 2023 And Tax-Free Vehicle Allowances For Business Travel
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  • June 13, 2023

CRA Mileage Rate 2023: The Basics

Are you an employee, small business owner, or self-employed individual looking to understand the rules and regulations of CRA mileage rate 2023 and tax-free vehicle allowances for business travel? Canadian taxpayers need to be aware of what they can expense on their taxes as entertainment, such as meals or kilometres travelled in a car.

We will discuss all relevant to ensure you maximize your deductions for businesses travelling while remaining compliant.

Key Takeaways

  • 68¢ per kilometre for the first 5,000km driven
  • 62¢ per kilometre after that
  • 72¢ per kilometre for the first 5,000km driven
  • 66¢ per kilometre after that
  • Understand CRA Mileage Rate 2023 and Tax-Free Vehicle Allowance Eligibility Criteria.
  • Keep records of all trips undertaken with details regarding destination, distance travelled, dates, etc.
  • Ensure expense reports comply with CRA guidelines to get successful reimbursements during tax season.

Understanding CRA Mileage Rates And Tax-Free Vehicle Allowances

This section provides an overview of the CRA mileage reimbursement rules and eligibility requirements for vehicle allowance rates.

Overview Of CRA Mileage Reimbursement Rules

When reimbursing employees for business travel, the Canada Revenue Agency (CRA) has set out a specific set of rules that employers must adhere to. Canadian taxpayers should be aware of these rules when managing their business expenses to avoid any penalties from the CRA.

The 2023 standard mileage rate per kilometre for all provinces is currently 68¢, with a decrease to 64¢ per kilometre after the first 5,000 kilometres driven yearly. The rate for the territories is 4¢ higher.

Here’s the CRA’s Automobile Allowance Rates for the past five years:

You can report any tax-subjected automobile allowances paid to employees or officers on Form T2200 Declaration of Conditions of Employment .

Businesses must recognize reimbursement requirements, as failure to comply could result in CRA-implemented fines and other financial penalties, which will financially affect both employers and their staff.

Eligibility For CRA Mileage Rate 2023 And Tax-Free Vehicle Allowances

The CRA provides rules and regulations for claiming tax-free vehicle allowances and mileage rates when travelling for business purposes.

You are also eligible if you use your car to attend conventions, seminars or meetings, and other activities with work-related purposes away from home. But travelling from your home to your normal place of work is not considered business-related driving.

The type of transportation used is essential—employees using public transport, such as buses and subways, do not qualify for any reimbursements. At the same time, those who choose personal cars will receive a predetermined per-kilometre rate (according to the CRA standard mileage rate as shown above).

Calculating CRA Mileage Rate in 2023 And Tax-Free Vehicle Allowances

From the CRA standard mileage rate to other eligible expenses for reimbursement, this section provides information on how to calculate and claim deductions related to business travel.

CRA Standard Mileage Rate

The CRA Standard Mileage Rate is Canada’s approved benchmark for tax-deductible reimbursement. The rate set by the CRA for 2023 currently stands at $0.68 per kilometre for business travel for the first 5,000 kilometres and $0.62 thereafter for all provinces. The rate for all territories is set at $0.72 for the first 5,000 kilometres and $0.66 thereafter.

This rate is intended to cover gasoline, oil and other related expenses when travelling on company business.

In addition to calculating standard mileage rates, employers can save money by taking advantage of tax deductions available via provincial/territorial initiatives such as flat fee fuel subsidies and offers from rental car companies.

Other Expenses Eligible For Reimbursement

In addition to the CRA mileage rate, other expenses can be eligible for reimbursement when calculating CRA mileage rates and tax-free vehicle allowances for business travel.

These include gas, repairs, maintenance, insurance premiums, tires/tire replacements, registration fees, parking and tolls incurred during business trips.

Self-employed individuals who use their vehicle exclusively for business may be able to claim all of the above expenses. It is crucial to keep detailed accounts of your vehicle use and expenses since all costs must be substantiated to qualify for reimbursement from the CRA.

Tax Implications

In Canada, tax deductions are available to businesses for business travel expenses, including mileage. Mileage allowance paid to employees or officers is treated as a taxable benefit subject to the employer’s income tax withholding at source, unless the allowance is considered “reasonable” by the CRA.

In order for the allowance to be considered “reasonable,” it must be paid on a kilometre basis for business travel only at the official CRA mileage rate and no additional reimbursement shall be provided to the employee for the same business travel using the vehicle.

If an employee is provided with the use of a company car, this will be presented as a taxable benefit, and taxes will be deducted accordingly.

Accurate tracking and record-keeping are essential when claiming CRA mileage rates and tax-free vehicle allowances for business travel. Recent changes have been implemented regarding the supporting documentation that employers must keep to claim certain deductions from their business’s income taxes relating to these types of expenses (e.g., a detailed log that includes the date of travel, route taken, and distance travelled).

If you need clarification about the tax implications, you can always consult a tax accountant who can help you with personal and corporate tax matters.

LEARN MORE: How to Find the Best Tax Accountant Near Me

3 Tips For Managing Business Travel Expenses

– Provide clear guidelines for employees to follow when tracking and recording business travel expenses, such as keeping detailed records and utilizing technology.

  • Keep Detailed Records

Keeping detailed records of business travel expenses is essential for Canadian taxpayers. It helps to accurately calculate CRA mileage rates and tax-free vehicle allowances and avoid potential issues during an audit from the Canada Revenue Agency (CRA). Taxpayers need to keep records such as:

• Travel logs showing the date, destination, purpose of trip and kilometres driven

• Gas receipts

• Oil changes

• Car maintenance & repair costs

• Insurance payments

• Any other related out-of-pocket expenses

By keeping these records, Canadian taxpayers can easily track their business travel expenses and ensure everything is accounted for correctly. Further, it provides evidence that any vehicle deductions are legitimate, so there are no problems or additional costs associated with CRA audits. Technology can also help Canadians monitor their spending by using various tools, such as Driversnote’s expense reimbursement system and tracking tool.

  • Use Technology To Track Expenses

Technology can be a valuable tool for managing business travel expenses associated with CRA mileage rates and tax-free vehicle allowances. Mileage tracking apps and other tools can enable accurate record-keeping and precise calculations, which can help taxpayers claim total tax deductions. Keeping a detailed log of trips is still necessary, but using technology reduces the need for manual tracking of odometer readings while adding convenience.

Examples of mileage tracking apps include TripLog , MileIQ , QuickBooks Self Employed , etc. Additionally, businesses may install GPS units on employee vehicles to keep track of automobile-related expenses for various purposes, including deduction claims at year-end taxes or providing client billing information when required.

Using these apps or tools can make managing business travel expenses in different locations within Canada easier by automatically tracking all drives based on time spent driving as per kilometre rate set by the CRA standard mileage allowance (SMA). It saves time to manually enter odometer readings every time an individual travels between two points, ensuring that no detail remains unaccounted during tax filing or claiming expenditures from bosses/employers, respectively.

DISCOVER: Useful Resources and Tools

  • Reimburse Employees Promptly

Employers must ensure that employees are reimbursed promptly and accurately for travel expenses on business trips to avoid any potential complications or legal ramifications.

Promptly reimbursing employees helps maintain employee morale and makes them feel empowered and valued, primarily if the employer guides them in navigating the expense system. Hence, they know exactly what to do when their reimbursements will be delivered and why it’s crucial.

According to Canadian tax laws, employers who provide an automobile allowance must maintain documents clearly outlining this arrangement and documenting all claims made by employees against it via an expense reimbursement form.

Furthermore, failure to automate the process in some way may lead to delays with repayment — another aspect that should be addressed in such arrangements.

CRA Mileage Rate 2023 FAQs And Conclusion

As business travel can be complicated and expensive, understanding the CRA mileage rates and tax-free vehicle allowances is essential. Following the rules prescribed by the Canada Revenue Agency (CRA) can save time, money, and energy when preparing your taxes.

The key takeaway from this article is to keep records of all your travels—including destinations, distances travelled, and dates—and submit accurate expense reports for CRA mileage reimbursement or claim for a business vehicle allowance as per eligible criteria as soon as possible.

Common questions related to CRA Mileage Rates in 2023 and Tax-Free Vehicle Allowances For Business Travel relate to eligibility criteria for claiming deductions on taxes relating to business trips; applicability of different rates in various provinces/territories; use of technology tools for tracking expenses; etc., all of which have been addressed throughout this article.

It’s also essential to remember that expenses must adhere to guidelines set forth by the Canada Revenue Agency’s prescriptions for deductions to apply on personal income tax filings.

1. What are the CRA mileage rates for business travel?

The Canada Revenue Agency (CRA) sets a mileage rate for business travel for automobile use. Currently, the kilometric rate is set at $0.68/km (2023) for the first 5,000km and $0.62/km thereafter for cars or vans leased or owned by employees.

2. How do you calculate vehicle allowances provided by employers through CRA?

To calculate vehicle allowance amounts provided by employers using the CRA mileage rate, multiply an employee’s total business kilometres driven during a given tax year with the corresponding kilometric rate of ($0.68 per km 2023 for the first 5,000km and $0.62 thereafter). This amount should be included in Box 14 on their T4 slip from the employer to declare it as income when filing taxes every year unless the allowance meets certain criteria and is considered “reasonable.”

3 . Are car expenses covered under my prescribed mileage rates allowance?

Yes – once you met CRA’s conditions, reimbursed car expenses such as insurance costs and eligible lease payments are intended to be covered by your prescribed mileage rates allowance according to CRA guidelines.

Are you looking for assistance with your personal or corporate taxes? Look no further than CPA Guide. Our network of top accountants and accounting firms in Canada will help you find the best CPA to suit your needs. Get started today with CPA Guide .

  • #CRA Mileage Rate

revenue canada travel allowance per km 2022

2022 CRA Business Mileage Rate

The Canada Revenue Agency, also referred to as CRA and the Canadian equivalent to the IRS, allows residents to deduct business mileage on a cost per kilometre basis. This is known as the CRA Mileage Rate or the Automobile Allowance Rate, and just as the U.S. Standard Mileage Rate , it is not a fixed value and can vary year to year.

What is the 2022 CRA Allowance Rate ?

The CRA Mileage Rate for 2022 has increased to the following:

  • 61¢ per kilometre for the first 5,000 kilometres driven
  • 55¢ per kilometre driven after that
  • In the Northwest Territories, Yukon, and Nunavut, there is an additional 4¢ per kilometre allowed for travel.

CRA Rules for Deducting Business Mileage

If you live in BC whether you are an employee or self-employed, the CRA has rules in place which must be followed for your business mileage to be deducted on your tax return, and they are pretty strict on these rules, so let’s review.

  • You’re required as part of your job to work away from the office regularly. This is a safeguard put in place to make sure you’re not deducting your office commute. For instance, if you live in the suburbs and work in the city, and you’re not required to drive for your business, you cannot claim mileage deductions for this drive.
  • You pay out-of-pocket for work-related travel. Your employer would need to sign a T2200 form confirming that you pay for your own business travel. If your employer reimburses you for your travel expenses , then you cannot deduct your business mileage. Even worse, if the reimbursement (or allowance) is above what the CRA deems acceptable, then your employer would be required to report the extra amount as the employee’s (your) income.

Keep CRA Compliant in 2022 with a Mileage Tracker

The CRA recommends that every person or business attempting to deduct their allowance keep a detailed and accurate log of the business mileage they rack up. This is important, as there have been instances where the CRA has declined mileage logs due to incomplete or inaccurate information.

By using a mileage tracker app, such as MileCatcher , you can rest easy knowing your business mileage will be automatically recorded as you’re driving, and you’ll be able to download detailed reports when it’s time to prepare your taxes.

While taxes are never fun, MileCatcher Teams makes it less troublesome for businesses and employees. Take comfort in knowing that you’ll have detailed records and reports of all your deductible expenses, and even better, you’ll save a ton of time and have fewer headaches for when tax time rolls around.

Telia

If devices mentioned above have not been purchased directly from a doctor, dentist, nurse or hospital , make sure you have something in writing from your medical practitioner to indicate that the device is medically required.

If you're not sure if your medical expense qualifies, follow the links below to Canada Revenue Agency information.

Cannabis as an Eligible Medical Expense

Income tax act s. 118.2(2)(u), cannabis regulations s. 264(1).

Previously, the cost of cannabis products could be eligible for the medical expense tax credit (METC) when they were purchased for a patient for medical purposes as per the Access to Cannabis for Medical Purposes Regulations , under the Controlled Drugs and Substances Act .

With the legalization of cannabis, as of October 17, 2018, eligible medical expenses include, for a patient who is the holder of an appropriate medical document , the cost of cannabis, cannabis oil, cannabis plant seeds or cannabis products purchased for medical purposes from a holder of a licence for sale for medical purposes of cannabis products. The individual purchasing the cannabis product must be registered as a client of the holder of a licence for sale.  This measure was included in Bill C-97 which received Royal Assent in June 2019.  See Licensed cultivators, processors and sellers of cannabis under the Cannabis Act .

Cannabis-related Definitions under the Cannabis Regulations s. 264(1):

Cosmetic procedures, taxtips.ca resources, canada revenue agency (cra) resources.

 - Details of medical expenses

Meal and vehicle rates used to calculate travel expenses for medical travel for each province - 2022 rates will be available in 2023

Income Tax Folios:

Revised: October 26, 2023

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Reimbursements and allowances for remote workers’ travel expenses

This content was originally published in the Canadian Tax Foundations newsletter: Canadian Tax Focus. Republished with permission.

Travel between an employee’s residence and a regular place of employment (RPE) has long been considered by the Canada Revenue Agency (CRA) to be personal travel and not part of the employee’s office or employment duties; therefore, any reimbursement or allowance relating to this travel is a taxable benefit. Conversely, where travel relating to a location other than an RPE is involved, such payments are non-taxable.

But what is an RPE in this era of remote work? A recent technical interpretation provides that a location used for a one-time, multi-day training session for remote workers is not an RPE for those workers (CRA document no. 2022-0936671I7, June 30, 2022); the CRA therefore concludes that the reimbursements and allowances for travelling there are generally non-taxable. However, the CRA notes one exception: allowances for meals (and presumably lodging) are non-taxable only if the rules for a special work site apply.

The CRA generally comments that whether a location is an RPE is a question of fact. CRA document no. 2012-0432671E5 (August 13, 2012) observes that a location could be an RPE even if the employee works there only once or twice a month, but the location might not be an RPE if the employee works there only once or for a few days during the year. In contrast, CRA document no. 2016-0643631E5 (August 17, 2020) declines to offer an opinion on a situation where an employee works at two different locations on alternating weeks. The 2022 technical interpretation takes more definitive positions, which are favourable to the employee.

The 2022 technical interpretation concerns an employer’s plans to hire new employees who reside far from the employer’s offices. The employees may work from home or designate one of the employer’s offices as their place of work, without requiring regular attendance or reserving an onsite workspace. The employer will also provide the necessary equipment for remote work. In addition, the employees will be required to attend a single three-day event during their employment contract for training and team-building activities. For employees who are required to attend, the employer will reimburse reasonable accommodation and transportation costs (bus, train) or provide a per-kilometre motor vehicle allowance. A meal allowance will also be provided.

The CRA concludes that the work location designated in the employment contract is not considered to be an RPE for the new employees. Therefore, reimbursements of travel expenses do not need to be included in their income under paragraph 6(1)(a). Also, reasonable per-kilometre allowances received by employees for the use of their motor vehicle for travel in the course of performing their duties will not be included in their income by virtue of subparagraph 6(1)(b)(vii.1).

The CRA notes that the situation for meal allowances is different. The exemption in subparagraph 6(1)(b)(vii) for reasonable allowances for travel expenses that are not for the use of a motor vehicle requires that the employee be travelling away from the municipality where the employer’s establishment is located. Since the employee’s home is not such an establishment, this condition is not satisfied. However, the CRA notes that the meal allowance could be non-taxable by virtue of subsection 6(6)—special work site. The CRA agrees that the work to be performed (that is, training and team-building activities) is considered temporary in nature and required as part of the employee’s duties. As such, the amounts paid for travel will not be required to be included in their income if all other conditions of the subsection are met. In particular, the employee must be away from home or at the special work site for at least 36 hours and cannot be expected to return home daily from the special work site because of the distance involved.

Similar reasoning would presumably apply to allowances for lodging expenses, although this issue was not discussed.

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Track mileage automatically

Medical travel in canada, in this article, cra rules on medical travel, medical travel if you travel more than 40 kilometres, medical travel over 80 kilometres in canada and abroad, cra medical travel rates 2022, medical travel rates 2021.

If you need to receive medical care, you may be able to deduct medical travel expenses for your medical mileage. The deductions can represent a big chunk of savings that you can claim at tax time. Here’s an overview of the rules for claiming medical travel from the CRA.

Firstly, you will need proof that you attended the medical service you needed. You can provide receipts for the services you’ve received or a document or letter signed by the provider of the medical service.

You cannot claim medical travel expenses if you travelled less than 40 kilometres in one direction to receive medical attention.

If you travelled more than 40, but less than 80 kilometres one way, you will be able to claim medical travel, and if you travelled more than 80 kilometres, you will be able to claim mileage, as well as accommodation, meal and parking costs.

You will also be able to claim travel expenses if you had to receive medical care outside of Canada.

If a medical practitioner certifies that you needed to be accompanied to receive medical attention, you will be able to claim the expenses of the attendant.

You will only be able to claim medical expenses for which you have not, and will not be reimbursed. If medical reimbursement has been included in your income (ergo, it will be taxed) you will be able to claim your medical travel expenses.

revenue canada travel allowance per km 2022

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You will be able to claim medical travel from the CRA such as bus, train and taxi fares, and vehicle mileage (if public transportation is not readily available) if you meet the following conditions:

  • You were not able to receive the needed medical care near your home
  • You took a reasonable and direct route
  • It was reasonable for you to travel to a farther destination in order to receive medical attention.

You can claim medical mileage from the CRA by the detailed or simplified method.

If you use the detailed method, you need to keep all receipts of your medical travel expenses in order to claim them. You are able to deduct all qualified public transport fares, and if you travel with your vehicle - all costs of operating and owning it. These include fuel, oil, insurance, maintenance, depreciation and more.

With the simplified method, you will be able to claim a flat medical mileage rate and you won’t need to keep detailed records. However, the CRA may still ask you to provide documentation to support your medical mileage claim, so we recommend keeping a logbook of your medical travel. See the flat cents per km rate for medical mileage .

If you need to travel more than 80 kilometres in order to receive medical care, you will be able to claim medical expenses such as bus, train and taxi fares, vehicle mileage (if public transportation is not readily available), meals, parking and accommodation if you meet the following conditions:

Again, you can claim medical travel and other expenses by the detailed or simplified method.

The detailed method of claiming medical travel and other expenses requires you to keep all receipts of your accrued expenses, such as for travel, parking (if applicable), meals and accommodation.

The simplified method lets you use a medical mileage rate and a per-meal rate for your expenses. Keep receipts of your accommodation costs, as there are no flat rates. While you don’t need to keep detailed receipts for medical travel and meals, the CRA may ask for documentation to support your mileage expenses claim.

The CRA will publish the medical travel rates for 2023 in the beginning of 2024.

If you claim medical travel with the flat per-kilometre medical rate, note that there are different rates for each Canadian territory.

Use the medical travel rates above to claim your medical travel expenses for 2022.

Are you claiming work-related mileage besides medical travel expenses? See our CRA mileage guide for all the rules on mileage reimbursement and deductions in Canada.

How to automate your mileage logbook

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The CRA announces 2024 rates for vehicle allowance: From January 1st, 2024, per kilometre rates will increase 2 cents over 2023.

CRA mileage rate 2023 in Canada. See how to use the CRA 2023 mileage rate as an employee, employer or self-employed individual.

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How to Deduct Mileage If You Are Self-Employed

revenue canada travel allowance per km 2022

When you’re self-employed , or have self-employed income, the Canada Revenue Agency (CRA) allows you to take a deduction for the mileage, or number of kilometres you rack up in your vehicle for business -related activities.

To calculate your deduction properly, you’ll need to keep track of your trips throughout the year, and also hang on to any receipts for vehicle-related purchases. While you won’t need to send these in with your return when you file, you will need to keep these documents with your tax records in case the CRA ever wants to know how you calculated your deduction.

If you use your vehicle for business, you might be able to take a mileage deduction.

Full Logbook

If you claim this deduction, the cra requires you to keep a  full logbook  that journals your travel activities..

The cornerstone of your mileage deduction is, of course, your mileage. Your logbook should list the odometer reading on the first day of the tax year (or the odometer reading on the first day you decided to start using your vehicle for business), and the odometer reading for the last day of the tax year. Then for each trip, note the date, the odometer reading when you begin and end the trip, the address or destination of your travel, and the business purpose for the trip. Vancouver tax professional Darryl Francis notes “Keeping a logbook is not an option – it’s a requirement. Simply estimating your mileage is not enough. You need to have something to prove your deduction if you’re ever audited, and estimates unfortunately are not audit-proof.”

Calculating Your Mileage Deduction

Your mileage deduction isn’t hard to calculate if you’ve kept accurate records in your logbook.

You’ll need two figures:

  • Total kilometres you drove during the year,
  • Total kilometres you drove for business purposes.

Once you have these two numbers, you simply plug them into the CRA formula for calculating your mileage deduction. You can deduct the full amount of allowable expenses for the car (for the portion of time you used the vehicle for business purposes). So, if you had $5,000 in total car expenses (licence fees, insurance, maintenance, etc.) and drove 10,000 miles for business out of 20,000 miles total for the year, your deduction for vehicle expenses would be $2,500.

Other Deductible Expenses

In addition to mileage expenses, the CRA also allows self-employed individuals to add  other vehicle expenses  to the total motor vehicle deduction.

Additional expenses include:

  • License and registration fees
  • Lease expenses,
  • Maintenance and repairs.

Similar to the mileage expenses you deduct; you can only claim the costs associated with your business travels. For some expenses, like repairs and maintenance, you may not be able to determine the cost directly related to your business use. In this instance, you’ll need to apply the percentage you use in your mileage calculations to these other costs.

Lastly, you can deduct the amount of lease payments for a vehicle you used for business. There is a limit, however, on how much of the leasing costs you can deduct if you use a passenger vehicle. The CRA website has a chart to help estimate your leasing cost deduction limit; and, of course, TurboTax software will calculate this automatically for you based on info you fill in.

For those self-employed Canadians who want to ensure that they claim every eligible deduction possible, the  QuickBooks Self-Employed App  is exactly what you need to track your mileage for business, for personal use and even those dead kilometres which are not claimed on your drivers summary, in the case of ride share driving.

Quickbooks Self-Employed  is also a fantastic tool to use for keeping track of expenses as it allows the user to categorize expenses as being either personal or business, with the swipe of a finger. This makes year-end tax filing using TurboTax Self-Employed so much easier and more accurate. It’s a must-have for those who want to pay the least amount of taxes legally possible.

Capital Cost Allowance

Capital Cost Allowance, or CCA, is a cost-recovery method that allows you to recover the physical cost of your vehicle. While you can’t deduct the entire cost in one year, the CRA allows you to recover a little bit each year through the CCA deduction. This also accounts for the depreciating value of your property over time.

Here  is a complete list of CCA which include all motor vehicle classes as well.

TurboTax Self-Employed  helps you easily manage your sole-proprietorship business earnings and expenses. However, if you feel a bit overwhelmed, consider  TurboTax Live Assist & Review, Self-Employed , and get unlimited help and advice as you do your taxes, plus a final review before you file. Or, choose  TurboTax Live Full Service for Self-Employed  and have one of our tax experts do you return from start to finish (not available for Quebec resident).

References & Resources

  • Darryl Francis , Professional Tax Preparer and Accountant; Vancouver, British Columbia

Related articles

How to calculate your tax refund, claiming the working income tax benefit (witb), the working income tax benefit.

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Ebrahimjee And Essaji Professional Accountants

CRA mileage rates and reasonable automobile allowances

Do you drive your personal vehicle for business purposes? You may be eligible for special allowances in your tax return! Keep reading to learn more about CRA mileage rates and reasonable automobile expenses.

What are mileage rates and reasonable automobile allowances?

The Canada Revenue Agency (CRA) provides mileage rates and reasonable automobile allowances for those who need to use their personal vehicles for work-related purposes. This includes motor vehicle expenses for transportation, travel, or other related business activities.

The CRA mileage rate considers the fixed and variable costs of operating a vehicle. The fixed cost per kilometre combines depreciation, interest on financing, licensing, registration and insurance costs. The variable expenses calculations account for fuel consumption and maintenance costs, including oil, tires and repairs.

Based on these factors, the CRA sets a prescribed rate to reimburse motorists for each kilometre they drive while conducting business activities. The CRA adjusts mileage rates annually and posts them on its public website.

What is the CRA reasonable allowance for mileage rates for 2023/2024?

If you are catching up with mileage rates and reimbursements for 2023, the CRA rate for automobile allowances calculates 68¢ per kilometre for the first 5,000 kilometres driven and 62¢ per kilometre driven after that. With an additional  4¢ per kilometre if driving in the Northwest Territories, Yukon, and Nunavut.

As of 2024, the CRA will give back 70¢ per kilometre for the first 5,000 kilometres driven and 64¢ per kilometre after that. If you drive in the Northwest Territories, Yukon or Nunavut, CRA mileage rates are 74¢ per kilometre for the first 5,000 kilometres and 68¢ afterwards.

You can check current and prior mileage rates on the CRA website .

How to report automobile allowances on your tax return?

Employers and business owners can calculate automobile allowances in three different ways:

  • Flat rate Allowance:  Flat rate allowances are a method of calculating automobile expenses for employees and business owners. This method allows employers to pay employees a fixed amount per pay period regardless of actual kilometres driven. This fixed amount is paid to employees in each pay period. When using the flat-rate allowance method, the allowance is considered a taxable benefit and must be reported on the employee’s T4. As with other taxable incomes, automobile allowances are subject to CPP contributions, Employment Insurance and income taxes. Both box 14 and “Other information” of an employee’s T4 slip shall reflect this allowance under code “40.”
  • Mileage Rate Allowance: mileage rate allowances consider the amount driven by a personal vehicle for business purposes. Allowances based on mileage driven are considered reimbursement for employee expenses and not a taxable benefit. In this case, they don’t meet the taxable income criteria nor CPP and EI deductions. This category’s allowance shall be paid using the CRA mileage rates posted under “Reasonable per-Kilometer Allowance.”
  • Combination of flat rate and mileage rate: depending on the employment contract and expectations, employers can pay a combination of flat rate and per mileage rate. In that case, CPP and EI deductions apply to the combined allowance under the taxable benefit reported on the employee’s T4.

Whether using per-kilometre mileage rates or a combination allowance, employees must keep detailed records of all motor vehicle expenses incurred while conducting work-related activities to substantiate claims made when filing taxes or applying for employer reimbursements.

Questions about which mileage rate to use and how to report it? Our team of experts can help determine which automobile allowance best fits your business. Contact us today and ensure you comply with CRA reporting and payroll deductions.

https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/benefits-allowances/automobile/automobile-motor-vehicle-allowances/reasonable-kilometre-allowance.html https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/benefits-allowances/automobile/automobile-motor-vehicle-allowances/flat-rate-allowance.html https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/benefits-allowances/automobile/automobile-motor-vehicle-allowances/combination-flat-rate-reasonable-kilometre-allowances.html https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/benefits-allowances/automobile/automobile-motor-vehicle-allowances/automobile-allowance-rates.html

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COMMENTS

  1. Meal and vehicle rates used to calculate travel expenses for 2022

    Meal expenses. If you choose the detailed method to calculate meal expenses, you must keep your receipts and claim the actual amount that you spent. If you choose the simplified method, claim in Canadian or US funds a flat rate of $23 per meal, to a maximum of $69 per day (sales tax included) per person, without receipts.

  2. Automobile allowance rates

    The automobile allowance rates for 2023 are: 68¢ per kilometre for the first 5,000 kilometres driven. 62¢ per kilometre driven after that In the Northwest Territories, Yukon, and Nunavut, there is an additional 4¢ per kilometre allowed for travel. The automobile allowance rates for 2022 are: 61¢ per kilometre for the first 5,000 kilometres ...

  3. Reasonable per-kilometre allowance

    Reasonable allowance rates. For 2024, they are: 70¢ per kilometre for the first 5,000 kilometres driven. 64¢ per kilometre driven after that. In the Northwest Territories, Yukon, and Nunavut, there is an additional 4¢ per kilometer allowed for travel. For prior-year rates, see Automobile allowance rates.

  4. Travel allowance

    The allowance is reasonable. The CRA generally considers a value of up to $23 for the meal portion of the travel allowance to be reasonable. This means that you do not have to include this type of travel allowance if its main reason is so that your employee's duties are performed in a more efficient way during a work shift.

  5. Appendix A: CRA Kilometric Rates

    Appendix A: CRA Kilometric Rates. Effective: January 1, 2022. The kilometric rates (payable in cents per kilometre) will be used for the application of the Directive on Travel. Rates are payable in Canadian funds only. Rates are reviewed on a quarterly basis effective January 1st of every year.

  6. Meal and vehicle rates used to calculate travel expenses for 2021

    Meal expenses. If you choose the detailed method to calculate meal expenses, you must keep your receipts and claim the actual amount that you spent. If you choose the simplified method , claim in Canadian or US funds a flat rate of $23/meal, to a maximum of $69/day (sales tax included) per person, without receipts.

  7. Cardata

    In 2022, the new Canada Revenue Agency rate is set at ¢61. The Canada Revenue Agency ("CRA") has updated their per kilometre recommended reimbursement rates for 2022. This year, the CRA automobile allowance rate is ¢61 per kilometre. ¢61 is the recommended rate per kilometre for the first 5,000 kilometres driven; the recommendation is ¢ ...

  8. CRA Mileage Rate 2022, Standard Mileage Allowance Rate By The CRA

    The 2022 CRA mileage rate is: 61 cents per kilometre for the first 5000 km driven. 55 cents per kilometre after that. The Northwest Territories, Yukon, and Nunavut have an additional 4¢ per kilometre allowed for travel. Log your business travel and calculate your reimbursements automatically.

  9. Line 25500

    the total travel expenses paid for the trip (enter the amount in Step 3, Chart B - column 4 of Form T2222); the cost of the lowest return airfare available at the time of the trip between the airport closest to your residence and the nearest designated city to that airport (enter the amount in Step 3, Chart B - column 5 of Form T2222); If you or an eligible family member uses the standard ...

  10. Current Mileage Rates In Canada

    The Canada Revenue Agency has announced the new 2024 mileage rates: 70 cents per km for the first 5000 km driven, up two cents from last year's rate. 64 cents per km after that. An additional 4 cents per business kilometre for the Northwest Territories, Yukon, and Nunavut. Log your business travel and calculate your reimbursements automatically.

  11. Historical CRA Mileage Rates

    The mileage rate used from January 1st 2022 to December 31st 2022 is: 61 cents per km for the first 5000 driven kilometres; ... Automobile allowance rate per km above 5,000. Additional business travel allowances in the Northwest Territories, Yukon, and Nunavut. 2024: 70c: 64c: 4c: 2023: 68c: 62c: 4c: 2022: 61c: 55c: 4c:

  12. CRA Mileage Rate

    The Canada Revenue Agency, also referred to as CRA, allows residents to deduct business mileage on a cost per kilometre basis. ... The additional 4 cents per kilometre allowance for the northern regions of Canada (Northwest Territories, Yukon, and Nunavut) takes into account the higher operational costs in these areas. ... 2022: 61¢/km for the ...

  13. Complete Guide To CRA Mileage Rate 2023 And Tax-Free Vehicle Allowances

    The Canada Revenue Agency (CRA) sets a mileage rate for business travel for automobile use. Currently, the kilometric rate is set at $0.68/km (2023) for the first 5,000km and $0.62/km thereafter for cars or vans leased or owned by employees.

  14. 2022 CRA Business Mileage Rate

    What is the 2022 CRA Allowance Rate ? The CRA Mileage Rate for 2022 has increased to the following: 61¢ per kilometre for the first 5,000 kilometres driven. 55¢ per kilometre driven after that. In the Northwest Territories, Yukon, and Nunavut, there is an additional 4¢ per kilometre allowed for travel.

  15. Claiming Medical Expense Travel Credits

    For example; if you drove 10,000 km during the year and 5000 of those kilometers were related to medical treatment (more than 40 km away), you can claim half of your total vehicle expenses on your tax return. If you chose the simplified method, you only need to determine how many km you traveled for medical treatment in the 12-month period.

  16. TaxTips.ca

    Canada Revenue Agency (CRA) Resources Lines 33099 and 33199 (lines 330 and 331 prior to 2019) - Eligible medical expenses you can claim on your return - Details of medical expenses. Meal and vehicle rates used to calculate travel expenses for medical travel for each province - 2022 rates will be available in 2023

  17. How to Document Meal and Travel Expenses

    Under the simplified method, you can claim a flat amount per meal. A claim of $23 per meal to a maximum of $69 per day was allowed for meals. Documenting Travel Expenses - Detailed Method. Similar to meal expenses, there are two ways to document your travel expenses. The first is to document your vehicle expenses with the detailed method.

  18. CRA Mileage Rate 2023

    The per-kilometre allowance for 2023 in Canada is 68 cents per km for the first 5000 km and 62 cents per km after that. You are not required to reimburse employees at the rate set by the CRA. You can reimburse them at a higher or lower than the official per km 2023 rate. The 2023 mileage rate represents the maximum amount you can deduct as ...

  19. Reimbursements and allowances for remote workers' travel expenses

    Therefore, reimbursements of travel expenses do not need to be included in their income under paragraph 6 (1) (a). Also, reasonable per-kilometre allowances received by employees for the use of their motor vehicle for travel in the course of performing their duties will not be included in their income by virtue of subparagraph 6 (1) (b) (vii.1).

  20. Medical Travel In Canada

    CRA Medical travel rates 2022. If you claim medical travel with the flat per-kilometre medical rate, note that there are different rates for each Canadian territory. ... The CRA announces 2024 rates for vehicle allowance: From January 1st, 2024, per kilometre rates will increase 2 cents over 2023. January 2, 2024 - 2 min read CRA Mileage Rate 2023.

  21. How to Deduct Mileage If You Are Self-Employed

    Total kilometres you drove for business purposes. Once you have these two numbers, you simply plug them into the CRA formula for calculating your mileage deduction. You can deduct the full amount of allowable expenses for the car (for the portion of time you used the vehicle for business purposes). So, if you had $5,000 in total car expenses ...

  22. Understanding mileage rates and automobile reasonable allowance

    What is the CRA reasonable allowance for mileage rates for 2023/2024? If you are catching up with mileage rates and reimbursements for 2023, the CRA rate for automobile allowances calculates 68¢ per kilometre for the first 5,000 kilometres driven and 62¢ per kilometre driven after that. With an additional 4¢ per kilometre if driving in the ...

  23. Allowance for Travel Expenses

    Any reasonable allowance (including an allowance for the use of a motor vehicle) that you pay an employee for travel expenses incurred during periods when the employee's duties consist in selling goods or negotiating contracts for you is not taxable. If the allowance is not reasonable, it is taxable and the full amount must be included in boxes ...

  24. South Africa: Reimbursive Travel Prescribed Rate and Travel Allowance

    Reimbursement travel transactions captured in the 2024/2025 tax year, will be calculated on the 2023/2024 rate R4.64 until the new software is installed - to correct the transactions, they will need to be deleted and recaptured. The Tax and Travel calculator for 2024/2025 has also been updated with the new scale and rate.

  25. South Africa: Reimbursive Travel Prescribed Rate and Travel Allowance

    South Africa: Reimbursive Travel Prescribed Rate and Travel Allowance calculation cost scale changes for 2024/2025 tax year Posted By Brian M 4 days ago The South African Revenue Authority (SARS) has a published the prescribed rate per kilometre and the cost scale used for the purpose of Calculating a Travel Allowance.