Mileage Reimbursement For Employees in Canada
In this article
- Mileage reimbursement rules for employees
- What you can receive an employee mileage reimbursement for
- CRA automobile allowance rates
- How to receive employee mileage reimbursement from your employer
- Records you need to keep for your vehicle alloance
- Will your employee mileage reimbursement be taxed?
If you are an employee in Canada, you might be reimbursed by your employer for work-related car expenses. If your employer does not offer reimbursement, you may also be eligible to deduct your car expenses from your tax return each year.
Never miss a trip. With the Driversnote mileage tracking app you have the tool to ensure every business kilometer you drive is properly logged.
Mileage reimbursement rules for employees
While the CRA establishes some base rules for mileage reimbursement through an automobile allowance for employees, employers can set their own rules and restrictions around what exactly they reimburse or cover by the automobile allowance. The below is handy to keep in mind:
If you use your own car (including a leased car), you can claim all work-related travel expenses from your employer or on your tax return.
If your commute was partially private, you can claim only the job-related part of your automobile costs.
What you can receive an employee mileage reimbursement for
You can claim an allowance for your car expenses if you use your own car for your work-related activities. Some examples of business-related travel include:
- Attending meetings or conferences away from your usual workplace
- Collecting supplies or delivering items
- Commuting from your usual workplace or home to another workplace (for example, a client’s office or worksite)
Generally, travel from home to work is not eligible for mileage reimbursement in Canada.
CRA automobile allowance rates
The current CRA automobile allowance rates for 2023 are:
- 68 cents per kilometre for the first 5,000km driven
- 62 cents per kilometre after that
The Northwest Territories, Yukon, and Nunavut get an additional 4 cents per kilometre.
Read more about the 2023 per-kilometre rate in Canada.
Your employer should inform you if they are using the official CRA rates or different automobile allowance rates for your mileage reimbursement.
Note that if you’re reimbursed at a higher rate than the CRA automobile allowance rate, you may pay income, pension and insurance contributions on your automobile allowance.
How to receive employee mileage reimbursement from your employer
This will depend on if the vehicle belongs to you or someone else.
You own or lease the vehicle
If you own or lease the vehicle you drive for business, the most common option for employers is to use the CRA automobile allowance rate for business travel instead of having you record all your expenses.
This way, the only additional costs you'll have to track are parking fees and tolls, rather than every cost related to owning your vehicle.
Finally, unless your company forbids it, there's no reason you can't drive multiple cars. Simply record your mileage separately for each vehicle.
The vehicle is provided by your employer
If you drive a car owned by your employer, you might be eligible for reimbursement for the costs of driving and maintaining the vehicle for business-related kilometres, such as gas, parking, fees and tolls, so long as you are the bearer of these costs.
You generally won’t be able to receive reimbursement at the automobile allowance rates, as these account for the cost of owning a vehicle. Make sure you keep a record of all of your work-related expenses, as most employers will require receipts or invoices.
Records you need to keep for your vehicle alloance
If you are claiming a vehicle allowance from your employer, they will inform you of their requirements and rules - but in short, you will need to show your employer that you drove the kilometres you’re claiming reimbursement for. Common ways of keeping records of your business driving are through an automatic logbook mobile application, physical records or spreadsheets of work-related trips.
For any business-related trip, you’ll most likely need to note the following:
- Purpose; and
- Number of kilometres driven
Easiest ways to keep a record of your trips
A majority of Canadian firms rely on the pen and paper method - manually recording each trip detail. However, if you’d like to save some time and make sure you don’t forget to write down any trips you should be reimbursed for, we recommend finding a mileage tracking app.
Apps can track your mileage automatically, logging all the needed details for you. You’ll be able to provide your employer with consistent and correct records of your driving.
Will your employee mileage reimbursement be taxed?
This depends on how your employer processes your claim.
- If your employer provides an automobile allowance at the standard rate for the relevant year, it would not be taxed.
- If your employer provides reimbursement at a rate higher than the CRA per-kilometre rate, it will be considered a benefit and taxed as a part of your income.
- If your employer reimburses your specific car expenses, these will be taxed (however you may be able to claim these as a deduction in your tax return).
- If your company reimburses you for certain car expenditures that aren't taxed, you can't deduct them because you haven't paid any taxes on them.
How to automate your mileage logbook
CRA Mileage Guide
- Mileage Rates For 2022 And Previous Years
- Mileage Logbook Requirements
- For Employers
- Is Car Allowance Taxable?
- How To Calculate Your Reimbursement
- For Employees
- Current CRA Mileage Rates
- For Self-Employed
- CRA Mileage Rate 2021
- CRA Mileage Rate 2022
- Claim Motor Vehicle Expenses In 5 Steps