Mileage reimbursement in Canada

There are two scenarios in Canada where you need to keep a mileage logbook:

  • If you get (or plan to get) reimbursed for your driven business miles as an employee (the reimbursement is tax free)
  • If you're self-employed either as a sole propriotor or in a partnership

Needed documentation

For each business trip, you need to keep a log listing the following:

  • date
  • destination
  • purpose
  • number of kilometres you drive.

This is automatically provided through our software.

Approved business mileage rates for employees

The automobile allowance rates in Canada for 2012 are:

  • 53 per kilometre for the first 5,000 kilometres; and
  • 47 per kilometre thereafter.

In the Northwest Territories, Yukon, and Nunavut, there is an additional 4 per kilometre for travel.

The automobile allowance rates in Canada for 2008 - 2011 are:

  • 52 per kilometre for the first 5,000 kilometres; and
  • 46 per kilometre thereafter.

In the Northwest Territories, Yukon, and Nunavut, there is an additional 4 per kilometre for travel.

Employed: what is considered business kilometres?

Business driving is any driving related to your job, except in the following situations;

Personal driving, which is any driving by an employee, or a person related to the employee, for purposes not related to his or her employment. This includes:

  • vacation trips;
  • driving to conduct personal activities; and
  • travel between home and work (even if you insist that the employee drives the vehicle home).

It is not considered to be personal driving if you are required or allowed by your employer to travel directly from home to a point of call (such as a salesperson visiting customers) other than your place of business to which you regularly reports, or to return home from that point.

Sole propriotor or in a partnership: how to claim expenses

You can deduct motor vehicle expenses only when they are reasonable and you have receipts to support them.

To get the full benefit of your claim for each vehicle, keep a record of the total kilometres you drive and the kilometres you drive to earn business income.

For each business trip, keep a log listing the following:

  • date
  • destination
  • purpose
  • number of kilometres you drive.

Record the odometer reading of each vehicle at the start and end of the fiscal period.

If you change motor vehicles during the fiscal period, record the dates of the changes and the odometer reading at the time you buy, sell, or trade the vehicle.

If you use more than one motor vehicle for your business, keep a separate record for each vehicle that shows the total and business kilometres you drive, and the cost to run and maintain each vehicle. Calculate each vehicle's expenses separately.

The types of expenses you can claim as a self-employed include:

  • licence and registration fees
  • fuel costs
  • insurance
  • interest on money borrowed to buy a motor vehicle
  • maintenance and repairs; and
  • leasing costs.

How to calculate your tax-deductions:

Take the total ammount of business related driven kilometres, and divide it with the total ammount of driven kilometres. Take this number and multiply it with the sum of all the documentet expenses. The result here is what you can claim as a tax-deduction.