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June 28, 2022 - 5 min read

How To Calculate Your CRA Mileage Reimbursement

As we show you the simple calculations that will help you work out your mileage reimbursement, know that we are using the current CRA automobile allowance rates. Find more information on the 2022 automobile allowance rates in our guide.

If you are an employee, your company may have a different rate than the one we use here. They may also have various mileage reimbursement policies. Take a look at our guide for employees here.

How to calculate your mileage for work in Canada

Assume for both examples that you drive your personal vehicle for business, and your company uses the CRA’s automobile allowance rates to figure out how much you should be reimbursed.

Example 1:

You have to calculate your mileage for work and have kept records for the past month - they show that you've driven 175km for business. The standard mileage rate is 61 cents per kilometre. To find your mileage reimbursement, you multiply the number of kilometres by the rate:

[km] * [rate], or 175 km * $0.61 = $106.75.

Example 2:

You have recorded your mileage for the year to date, and they show that you’ve driven 5,700km for business. The standard mileage rate is 61 cents per kilometre for the first 5,000km, then 55 cents for each additional kilometre. The formula is as follows:

[5000 km] * [rate 1] + [Additional km] * [rate 2], or:

5000 * $0.61 = $3,050, plus

700 * $0.55 = $385, for a total reimbursement of $3,435.

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Calculate mileage reimbursement from the CRA

You can deduct reasonable motor vehicle expenses when you have receipts to support them. These can include licence & registration fees, fuel and oil costs (or electricity costs for zero-emission vehicles), as well as your insurance costs, interest on a car loan, maintenance, repairs, and/or leasing costs. To calculate your mileage reimbursement using a logbook, first, you will need to decide which logbook method to use:

  • The full logbook method
  • The simplified logbook method

The full logbook method

Using the full logbook method, you must record every kilometre driven with a breakdown of what is personal and what’s business-related driving. 

For any trip logged as business-related, you’ll need to note the following:

  • Date
  • Destination
  • Purpose; and
  • Number of kilometres driven

In addition, you’ll need to record your vehicle’s odometer readings at the start and end of the year (or fiscal period). Alternatively, if you change vehicles during the year, you’ll need to record the dates that you changed vehicles as well as the odometer reading when the change was made.

Motor vehicle expenses can only be deducted if they are reasonable and if you have receipts to back them up, according to the CRA. Deductible expenses include:

  • Licence & registration costs
  • Fuel & oil
  • Electricity (for zero-emission vehicles)
  • Insurance
  • Maintenance & repairs
  • Leasing costs
  • Interest on money borrowed to buy the motor vehicle

Finally - if you use more than one vehicle for business purposes, remember to record the kilometres for both vehicles separately, as well as record your expenses for each vehicle. You must calculate your deduction for each vehicle separately.

Now, let’s look at an example of calculating your mileage reimbursement from the CRA through the full logbook method.

Example: During the year, you have recorded a total of 12,000km - 8,000km of which have been business-related - and you have incurred car-related expenses of $4,000. To calculate your deduction, you need to multiply your expenses by your business use percentage:

( [business km] / [total km] ) * [expenses], or:

( [8,000 km] / [12,000 km] ) * $4,000 = 0.75 * $4,000, for a total deduction of $3,000.

The simplified logbook method

Once you have a full 12 months of driving (both business and personal) recorded in a logbook, you can use that to establish a “base year” for your business usage. 

When the base year is established, you can then use a three-month sample from the current year to forecast your business usage for the entire year. 

There are some limitations here - the calculated business use for the sample period must be within 10% of the business use in the base year. If business usage in the sample period is different from the base year by more than 10%, the sample period logbook will only be reliable for the 3 months of driving you recorded, and you will need to determine business usage for the remainder of the year by logging all of your driving once more.

The formula that the CRA requires to calculate your annual business use using the simplified logbook method is:

(Sample year period % ÷ Base year period %) × Base year annual % = Calculated annual business use

Example 1:

Jenny has completed a logbook for all of 2020, which showed her business use percentage in each quarter as 48% / 53% / 61% / 35%, with the average annual business use of 49%. From January to March of 2021, she maintained a sample logbook showing that her business use was 57%. For the same period of the base year, her business use was 48%. The calculated annual business use is worked out as follows:

(Sample year period % ÷ Base year period %) × Base year annual % = Calculated annual business use

(57 % ÷ 48 %) × 49 % = 58%

In this instance, her sample logbook would be accepted for the year, with the annual business use of 58% - as this is within 10% of the base year’s business use of 49%.

Example 2:

Steve has completed a logbook for 2019 which showed his business use percentage in each quarter as 34% / 35% / 36% / 35%, with an average annual business use of 35%. In 2020, his usage was consistent with 2019 percentages, however, from January to March of 2021, his business requirements increased and the business usage percentage increased to 60%.  When comparing this to the January - March period of 2019, where the business use of his car was 34%, the calculated annual business use is worked out as follows:

(Sample year period % ÷ Base year period %) × Base year annual % = Calculated annual business use

(60 % ÷ 34 %) × 35 % = 62%

As you can see above, Steve’s calculated business use is more than 10% above the annual business use in his base there. Therefore, his base year record will no longer be suitable, and he should consider establishing a new base year by maintaining his logbook for a new 12 month period. 

Work out the mileage reimbursement you can claim

To calculate your reimbursement using either logbook method, you need to know the business use percentage of your car expenses. Let’s look at a simple example:

At the end of the financial year, your logbook shows a record of 35,000 total kilometres. Of the 35,000 kilometres, 80% were for business purposes.

After adding up all of your expenses for the year from the receipts and invoices you’ve kept, your total car-related expenses are $10,000 for the financial year. Calculate your mileage reimbursement by following this calculation:

[Car expenses] x [Business Use %] = [Deduction]

$10,000 x 80% = $8,000

You can claim your mileage reimbursement for more than one car. You will need to keep a separate logbook for each vehicle, plus separate receipts and invoices for each of them.

FAQ

Mileage reimbursement is meant to cover all expenses you accrue when using your personal vehicle for business. These expenses include both owning and operating the vehicle, such as tax and insurance, and fuel and maintenance.
Calculate your mileage reimbursement by multiplying your business-related kilometres with the CRA mileage rate for 2022 - 61 cents for the first 5000km. After 5000km, the rate decreases to 55 cents per kilometre.
Employers in Ontario, as well as in the rest of Canada, are not obliged by law to provide mileage reimbursement to employees. However, it is a common practice across the country to provide reimbursement. If you are not reimbursed by your employer for your business-related mileage, you will be able to claim a deduction on your taxes.

How to automate your mileage logbook

Manually filling out your logbook can get tedious - see how to automatically track trips for your mileage reimbursement or deductions.

This material has been prepared for general informational purposes only, and should not be taken as professional advice from Driversnote. You should consider seeking independent legal, taxation, or financial advice from a professional to check how this information relates to your own circumstances. Relevant laws also change from time to time.