UPDATED SEP 24, 2021 • 4 MIN READ
For business-related mileage incurred from January 1, 2021, the CRA automobile allowance rates are:
In 2021, the automobile allowance rate starts at 59 cents per kilometre driven for business. After 5,000 kilometres, the rate drops to 53 cents per km driven for business.
Usually, when people talk about the automobile allowance rate or the cents per kilometre rate, they mean the one used for business - that is when you drive your personal vehicle for business purposes and are reimbursed the costs. The CRA sets the standard automobile allowance rate each year, though your employer may offer a different rate.
As an employee, your employer can choose the rate that they reimburse mileage costs at. It’s up to your employer to set their rate and rules for reimbursement, but the CRA’s automobile allowance rate is the standard. If you're paid a higher or lower per kilometre rate than the CRA’s standard rate, those payments may be considered taxable income.
As a self-employed entrepreneur or a business owner, you always have the option to calculate the costs of operating your vehicle for business using a logbook. Read more about how to calculate your tax deductions if you are self-employed here.
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There are many options, but we believe that mileage tracking apps are your go-to. By using your phone's GPS, you can easily track and log all your trips. They also store your information and generally allow you to classify each trip as personal or business, as per the rules set down by the CRA. We've got you covered with a simple, free and user-friendly app whether you use Android or iOS.
Other alternatives are keeping a physical logbook or using a spreadsheet. Whatever you choose, be sure to understand what information you need to record for your employer or the CRA. The biggest advantage when using a logbook app in comparison to a spreadsheet is that it may take you a lot less time to log trips and there is no chance of you losing your data (as you could lose a notebook).
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.