FAQ about the CRA automobile allowance in Canada
Mileage reimbursement and logging can be confusing for all of us. We notice that our users are often unsure about the rules, automobile allowance rates and requirements for adequate logging. In this post, we will aim to answer some of the most frequently asked questions about mileage rates and reimbursement in Canada.
What is the 2022 CRA automobile allowance rate?
The mileage rate for business mileage incurred in 2022 is 61¢ per kilometre for the first 5,000 kilometres driven, 55¢ per kilometre. Read more about the 2022 business mileage rate in our guide.
What was last year’s automobile allowance?
The automobile allowance rate for 2021 was:
- $0.59 per kilometre for the first 5,000km driven for business; and
- $0.53 per kilometre driven for business after that.
- An additional $0.04 per kilometre in the Northwest Territories, Yukon, and Nunavut.
Are the CRA automobile allowance rates the same for self-employed and employees?
Yes, the CRA automobile allowance rate applies to everyone, unless you are reimbursed at a different rate decided by your employer.
How do I get my automobile allowance from the CRA?
In order to receive an automobile allowance in the form of a tax deduction from the CRA, you need to keep all your car-related expenses’ receipts and invoices throughout the year, as well as a logbook showing your personal and business trips.
To know for sure that your mileage logbook is compliant, you need to carefully follow all CRA rules and advice. The requirements for compliance may differ a lot depending on your situation. It may differ depending on whether you are self-employed, an employee or an employer. If you are an employer who needs a solution for his team, you can check out our Teams page here.
If you are using the logbook method, you can have everything you need for reimbursement if you log the following:
- Purpose; and
- Number of kilometres driven
In some cases, this may be enough and we strongly encourage you to check out our mileage log requirements guide here to figure out what you need depending on your particular situation.
Should I provide an automobile allowance to my employees?
Employees generally expect to be compensated for work-related car expenses, whether they drive company cars or their personal vehicles for business.
There are advantages to paying out an automobile allowance to your employees - it can help keep them happy and even attract new ones. If done correctly, reimbursing them is tax-free for you (as reimbursements are deductible business costs), and it also helps your company pay less tax.
Many companies use an app for mileage tracking, and the majority of them use the CRA automobile allowance rate (while some allow you to set your own rate as well). Employees save time because they don't have to keep mileage logs by hand, and it's the simplest method as it does most of the work for them. Using an app also assists your company in avoiding over-reported mileage claims and ensures that your employees receive what they are entitled to.
What is the best way to track my kilometres to receive an automobile allowance?
You can track your mileage manually by checking how much you have driven on your GPS or logging your odometer each time you drive. However, you can also use a mileage tracker app that will automatically record your trips. The app allows you to spend less time dealing with the procedure of mileage tracking and logging. We believe that the best way to track mileage is with a mileage tracker app but we encourage you to try different ways and see what fits your needs best.
Do mileage tracking apps use the CRA automobile allowance rates?
There are many mileage tracking app options for Canada and most of them allow you to use the standard CRA automobile allowance rate or choose your own rate. A mileage tracking app also serves as a logbook for you and allows you to log your trips and generate CRA compliant reports. The best mileage tracking apps should include the following:
- The option to record your trips
- The option to categorize trips
- The option to generate CRA compliant mileage reports
- Automatic tracking of trips
If you have more questions, head over to our CRA mileage guide where you can find more frequently asked questions about mileage logging, receiving an automobile allowance and using a mileage tracker app in Canada.
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You need to make sure that you are using the proper mileage rate to calculate your reimbursement properly. It can be confusing to figure out...