October 26, 2021

Frequently Asked Questions about Mileage Reimbursement in Canada 

Mileage reimbursement and logging can be incredibly 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. 

How do I know if I am CRA compliant?

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:

  • Date
  • Destination
  • 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.

What is the mileage rate for 2022? 

The mileage rate for business mileage incurred in 2022 is 61¢ per kilometre for the first 5,000 kilometres driven. Read more about the 2022 business mileage rate in our guide

What was the automobile allowance rate for 2021?

The automobile allowance rate 2021 is:

  • $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 driven in the Northwest Territories, Yukon, and Nunavut.

What was the automobile allowance rate for 2020? 

If you need to put into your logbook some trips that you took in 2020, you will want to use the appropriate mileage rate, also known as an allowance rate. 

  • Between January 1st and December 31st, 2020, the CRA allowance rates were:  
  • $0.59 per kilometre for the first 5,000km driven for business; and
  • $0.53 per kilometre driven for business after that.
  • For all business-related driving in the Northwest Territories, Yukon, and Nunavut, there is an additional allowance of $0.04 per kilometre.

Should I pay mileage reimbursement 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 reimbursing your employees' business expenses, including the fact that it can help keep your employees 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.

Track and log mileage easily

Avoid over-reported mileage claims

Depending on the method you use to calculate your work-related car expenses, you should keep the following records and ask your employees to do the same:

  • Information on the number of kilometres driven for business and personal purposes.
  • Receipts for fuel, oil, repairs, servicing, or insurance
  • Paperwork for registration
  • Any loan or lease documents, if applicable
  • Any applicable tax invoices
  • Details on how you arrived at your claim (your calculations)

Read more about mileage reimbursement for employers here

Are the CRA automobile allowance rates for self-employed the same as if you are an employee? 

Yes, the CRA automobile allowance rate for 2021 applies to everyone, unless you are reimbursed a different amount decided by your employer. 

What is the best way to track mileage?

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 automovile 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

As a minimum, you should always look for this when looking for the best mileage app for you and make sure which automobile allowance rates you need to be using. We recommend the Driversnote mileage tracking app for Canada, but we also encourage you to do your research and decide on the app to get based on your tracking and logging needs.

If you have more questions, head over to our CRA mileage guide where you can find more frequently asked questions about mileage logging, mileage reimbursement and using a mileage tracker app in Canada.