Updated 2019 March
Your mileage may lead to tax relief. You can use total kilometres logged to calculate tax deductions for business vehicle use. Accurate tracking of mileage can help lead to saving when the time comes to file an income tax return.
Why you need to track mileage
The CRA recommends keeping a full logbook that shows exactly how a vehicle is being used for business purposes. For each vehicle used, it's a good idea to record the odometer reading at the start of each fiscal period. When switching to a different vehicle during the fiscal period, make sure to document the dates and the odometer readings.
How to report mileage for tax relief
You can use the Statement of Employment Expenses to report your vehicle expenses. Everyone who uses a vehicle to earn income and wishes to claim expenses must report information about the vehicle on the income tax return, including:
- Make, model and year of the vehicle
- Total kilometres that were driven during the year to earn income
- Total kilometres that were driven during the tax year.
The form also requires information on any motor vehicle expenses paid by the taxpayer:
- Fuel
- Maintenance and repairs
- Insurance
- Licence and registration
- Capital cost
- Applicable interest
- Leasing
- Other costs.
How to calculate your motor vehicle expense deduction
Use the total amount to calculate the amount of the allowable tax deduction for motor vehicle expenses. Apply the following formula: (Business kilometres / Total kilometres) X Total Vehicle Expenses = Motor Vehicle Deduction.
Reasonable allowances for mileage
When an employer reimburses an employee for mileage, whether the vehicle is owned by the employee or employer, the CRA has rates for what they consider a reasonable per-kilometre allowance. Staying within these rates mean the motor vehicle benefit is tax-free. Employees don't have to include the allowance when they report income on their tax return. Any expenses not covered by the allowance are tax deductible. For 2019, the rates are:
- 58¢ per kilometre for the first 5,000 kilometres driven, and
- 52¢ per kilometre driven after that.
For 2018, the automobile allowance rates are:
- 55¢ per kilometre for the first 5,000 kilometres driven, and
- 49¢ per kilometre driven after that.
Add an additional4¢ per kilometre for the Northwest Territories, Yukon, and Nunavut. The CRA considers an allowance reasonable if:
- The allowance is based only on the number of business kilometres driven in a year
- The rate paid per kilometre is reasonable (as shown above)
- The employee was not reimbursed for expenses related to the same vehicle.
General prescribed rate
An employee receives a taxable benefit when the employer pays automobile operating expenses for personal use of a vehicle. This amount is calculated separately from the standby charge. For 2019 the general prescribed rate is 28¢ per kilometre. If the employee works in selling or leasing automobiles, the general prescribed rate is 25¢ per kilometre.
Automobile benefit
The total amount of the value of an automobile benefit for a vehicle provided by an employer is calculated using the standby charge, which requires mileage, and operating expenses, which includes costs such as fuel and repairs.
