CRA Mileage Rate 2024: Guide to Tax-Free Vehicle Allowances For Business Travel

CRA Mileage Rate 2024

Are you an employee, small business owner, or self-employed individual looking to understand the rules and regulations of CRA mileage rate this 2024? Canadian taxpayers need to be aware of what they can expense on their taxes as entertainment, such as meals or kilometres travelled in a car.

We will discuss all relevant to ensure you maximize your deductions for businesses travelling while remaining compliant.

Key Takeaways

  • CRA’s 2024 automobile allowance rates for all provinces:
    • 70¢ per kilometre for the first 5,000km driven
    • 64¢ per kilometre after that
  • The Northwest Territories, Yukon, and Nunavut get an additional 4¢ per kilometre:
    • 74¢ per kilometre for the first 5,000km driven
    • 68¢ per kilometre after that

Changes to the CRA mileage rate for 2024

When reimbursing employees for business travel, the Canada Revenue Agency (CRA) has set out a specific set of rules that employers must adhere to. Canadian taxpayers should be aware of these rules when managing their business expenses to avoid any penalties from the CRA.

The 2024 standard CRA mileage rate per kilometre is currently 70 cents with a 4-cent per kilometre reduction after the first 5,000 kilometres driven yearly.

Here’s the CRA’s Automobile Allowance Rates for the past five years:

This is a CRA mileage rate 2024 table. It shows the CRA mileage rates for first 5,000km  and over 5,000km in provinces and territories from 2020 to 2024.

You can report any tax-subjected automobile allowances paid to employees or officers on Form T2200 Declaration of Conditions of Employment.

Employers can claim input tax credits based on reimbursements made for these expense claims but must ensure they keep detailed records alongside invoices related to any incurred costs.

Businesses must recognize reimbursement requirements, as failure to comply could result in CRA-implemented fines and other financial penalties, which will financially affect both employers and their staff.

What is CRA mileage allowance and tax-free vehicle allowance in Canada?

The CRA mileage rates are a guide set by the Canada Revenue Agency to reimburse taxpayers for vehicle expenses incurred for business use. They calculate the deductible expenses related to operating a vehicle for business, medical, moving, or charitable purposes. Taxpayers can use these rates to calculate their deductible vehicle expenses when filing their income tax returns.

How to use the 2024 CRA mileage rate and automobile allowance: Salaried workers, Self-employed, and Employers

Mileage Reimbursement Rules for Salaried Workers

Employees may be eligible to claim allowable motor vehicle expenses on their income tax return if they incurred these expenses under the terms of their employment contract. For instance, if an employer agrees to reimburse travel expenses for using one’s personal vehicle for work-related tasks.

However, it’s essential for employees to maintain accurate records and evidence to substantiate that the kilometers claimed were indeed for business purposes.

Mileage Reimbursement Rules for Self-employed

Self-employees can also deduct business-related vehicle expenses. This also applies to personal cars used for business purposes such as purchasing supplies for your businesses, meeting with clients, attending conferences, or visiting customers. Other expenses may also include:

  • License and registration fees
  • Fuel and oil expenses
  • Insurance fees
  • Maintenance and repairs expenses
  • Leasing costs
  • Capital cost allowance

The allowance will be deducted in the annual tax returns. But remember, self-employees must keep receipts and invoices in order to get deductions. Expenses incurred for personal use of their personal vehicle will not be eligible for coverage under the allowance.

Mileage Reimbursement Rules for Employers

There is no law mandating that employers must compensate employees for using their personal vehicles for business purposes – this depends on individual company policies or contracts.

Nevertheless, implementing a mileage allowance using Canada Revenue Agency (CRA) standards can make a job offer more attractive to potential employees, as it compensates for their personal vehicle usage.

With a CRA mileage allowance, employers are obliged to cover employees’ work-related vehicle expenses. This reimbursement also provides a tax benefit for the company. To qualify as legitimate and tax-deductible, the reimbursement should:

  • Cover the yearly amount of kilometres driven solely for business purposes
  • Be based on a reasonable per-kilometre rate or slightly lower than the official CRA vehicle allowance rates
  • Be for the employee who hasn’t already been reimbursed for the same use of their vehicle.

If these conditions are met, the mileage reimbursement is considered a non-taxable benefit for employees.

Eligibility For CRA Mileage Rate 2024 And Tax-Free Vehicle Allowances

The CRA provides rules and regulations for claiming tax-free vehicle allowances and mileage rates when travelling for business purposes.

You are also eligible if you use your car to attend conventions, seminars or meetings, and other activities with work-related purposes away from home. But travelling from your home to your normal place of work is not considered business-related driving.

The type of transportation used is essential—employees using public transport, such as buses and subways, do not qualify for any reimbursements. At the same time, those who choose personal cars will receive a predetermined per-kilometre rate (according to the CRA standard mileage rate as shown above).

4 Types Of Business Travel Eligible For CRA Mileage Rates And Tax-Free Vehicle Allowances

  • Regular Work Locations
  • Temporary Work Locations
  • Home Office as a Regular Work Location
  • Commuting to Work

Whether travelling for regular work locations, temporary work locations, home office or commuting to work, you’ll find everything you need to know about the CRA mileage rates and tax-free vehicle allowances here.

  1. Regular Work Locations

Canada Revenue Agency (CRA) defines regular work location as any workplace that the employee visits at least once a week on a sustained basis for a purpose related to their employment.

It includes both long-term and short-term job positions or assignments. The employer must be able to provide sufficient proof of attendance; records such as timesheets should help demonstrate this.

In addition, travel expenses associated with these locations are only eligible for reimbursement if they are located more than 80 km (one way) from the primary place of business or residence of the employee.

For example, an accountant who works in Toronto but travels to Ottawa each weekend would likely qualify for CRA mileage rate reimbursements since it’s more than 160 km one way between cities—even if he has not been assigned there permanently yet.

  1. Temporary Work Locations

Any work location other than an employee’s regular place of employment is considered a “temporary” work location and would be eligible for mileage rate and tax-free vehicle allowances.

According to CRA guidelines, temporary locations last up to four weeks or have been pre-approved by the employer in writing. Considering all surrounding circumstances, the employer must demonstrate why the travel was reasonable.

Any expenses related to this travel, such as lodging, meals, allowance and specific motor vehicle rates, can be deducted from income if proven to be necessary business or relocation expenses incurred during that journey.

  1. Home Office As A Regular Work Location

Home offices may qualify for either CRA mileage reimbursement or tax-free vehicle allowance when it is determined to be a regular work location.

To qualify as a regular work location, the home office must be used for working with clients or customers more than 50% of the time each month and must meet specific criteria, such as having private entrances, separate telephone lines and an exclusive portion of the residence dedicated solely for business activities.

  1. Commuting To Work

Commuting expenses incurred while travelling to and from work regularly are usually not eligible for mileage rate or tax-free vehicle allowance benefits under the CRA.

However, Canadian taxpayers can claim certain commuting expenses for business activities associated with their job or profession that require them to travel and attend industry events or other such engagements away from their workplace.

To be eligible, the primary purpose of this travel must be generating income by performing duties related to your job/profession rather than commuting between home and work.

LEARN MORE: How to Find the Best Tax Accountant Near Me

Mileage Reimbursement Implications

Tax Implications

In Canada, tax deductions are available to businesses for business travel expenses, including mileage and car allowances. Mileage allowance paid to employees or officers is treated as a taxable benefit subject to the employer’s income tax withholding at source.

If an employee is provided with the use of a company car, this will be presented as part of their salary, and taxes will be deducted accordingly. For employers, eligible expenditure on providing car allowances to employees may also qualify for input tax credits if applicable according to prevailing rules in each province or territory.

Accurate tracking and record-keeping are essential when claiming CRA mileage rates and tax-free vehicle allowances for business travel. Recent changes have been implemented regarding the supporting documentation that employers must keep to claim certain deductions from their business’s income taxes relating to these types of expenses (e.g., a detailed log that includes the date of travel, route taken, and distance travelled).

If you need clarification about the tax implications, you can always consult a tax accountant who can help you with personal and corporate tax matters.

LEARN MORE: How to Find the Best Tax Accountant Near Me

External Influences

  1. Economic Conditions: Rates might be adjusted to align with prevailing economic conditions.
  2. Cost of Fuel: Fluctuations in fuel prices may cause the allowance rate to increase or decrease.
  3. Inflation Rates: General inflation can affect the cost of vehicle maintenance, repairs, insurance, and other related expenses. CRA might adjust the mileage allowance accordingly.
  4. Policy Changes:Any new regulations regarding business expenses and reimbursements might necessitate changes to the allowance.
  5. Technological Advancements:The increase in electric and hybrid vehicles can affect the per-kilometre cost calculation regarding vehicle expenses, which could potentially impact the CRA mileage allowance.

3 Tips For Managing Business Travel Expenses and Mileage Tracking

– Provide clear guidelines for employees to follow when tracking and recording business travel expenses, such as keeping detailed records and utilizing technology.

1. Keep Detailed Records

Keeping detailed records of business travel expenses is essential for Canadian taxpayers. It helps to accurately calculate CRA mileage rates and tax-free vehicle allowances and avoid potential issues during an audit from the Canada Revenue Agency (CRA). Taxpayers need to keep records such as:

• Gas receipts

• Oil changes

• Car maintenance & repair costs

• Insurance payments

• Any other related out-of-pocket expenses

By keeping these mileage records, Canadian taxpayers can easily track their business travel expenses and ensure everything is accounted for correctly. Further, it provides evidence that any vehicle deductions are legitimate, so there are no problems or additional costs associated with CRA audits. Technology can also help Canadians monitor their spending by using various automatic mileage tracking tools, such as Driversnote’s expense reimbursement system and tracking tool – perfect for managing business trips abroad or just around town!

2. Use Technology To Track Vehicle Expenses

Technology can be a valuable tool for managing business travel expenses associated with CRA mileage rates and tax-free vehicle allowances. Mileage tracking apps and other tools can enable accurate record-keeping and precise calculations, which can help taxpayers claim total tax deductions. Keeping a detailed log of trips is still necessary, but using technology reduces the need for manual tracking of odometer readings while adding convenience.

Examples of mileage tracking apps include TripLog, MileIQ, QuickBooks Self Employed, etc. Additionally, businesses may install GPS units on employee vehicles to keep track of automobile-related expenses for various purposes, including deduction claims at year-end taxes or providing client billing information when required.

Using these apps or tools can make managing business travel expenses in different locations within Canada easier by automatically tracking all drives based on time spent driving as per kilometre rate set by the CRA standard mileage allowance (SMA). It saves time to manually enter odometer readings every time an individual travels between two points, ensuring that no detail remains unaccounted during tax filing or claiming expenditures from bosses/employers, respectively.

DISCOVER: Free Resources

3. Reimburse Employees Promptly

Employers must ensure that employees are reimbursed promptly and accurately for travel expenses on business trips to avoid any potential complications or legal ramifications.

Promptly reimbursing employees helps maintain employee morale and makes them feel empowered and valued, primarily if the employer guides them in navigating the expense system. Hence, they know exactly what to do when their reimbursements will be delivered and why it’s crucial.

According to Canadian tax laws, employers who provide an automobile allowance must maintain documents clearly outlining this arrangement and documenting all claims made by employees against it via an expense reimbursement form.

Furthermore, failure to automate the process in some way may lead to delays with repayment — another aspect that should be addressed in such arrangements.

  1. Understanding Provincial/Territorial Allowances and Mileage Rates in Canada

Canadian taxpayers are responsible for understanding the differences between federal and provincial/territorial allowances when claiming expenses related to business travel.

The CRA has a standard mileage rate of $0.70 per kilometre for the first 5,000 kilometres driven each year; however, some provinces or territories might have additional tax-free vehicle allowance amounts based on their accommodations, cost of living or other particular circumstances that could increase the amount an individual can claim up from CRA’s base rate.

CRA Mileage Rate 2024 Conclusion

As business travel can be complicated and expensive, understanding the CRA mileage rates and tax-free vehicle allowances is essential. Following the rules prescribed by the Canada Revenue Agency (CRA) can save time, money, and energy when preparing your taxes.

The key takeaway from this article is to keep records of all your travels—including destinations, distances travelled, and dates—and submit accurate expense reports for CRA mileage reimbursement or claim for a business vehicle allowance as per eligible criteria as soon as possible.

Common questions related to CRA Mileage Rates this 2024 And Tax-Free Vehicle Allowances For Business Travel relate to eligibility criteria for claiming deductions on taxes relating to business trips; applicability of different rates in various provinces/territories; use of technology tools for tracking expenses; etc., all of which have been addressed throughout this article.

It’s also essential to remember that expenses must adhere to guidelines set forth by the Canada Revenue Agency’s prescriptions for deductions to apply on personal income tax filings.


1. What are the CRA mileage rates for business travel?

The Canada Revenue Agency (CRA) sets a mileage rate for business travel for automobile and bicycle use. Currently, the kilometric rate is set at $0.70/km (2024)for taxis, cars or vans leased or owned by employees.

2. How do you calculate vehicle allowances provided by employers through CRA?

To calculate vehicle allowance amounts provided by employers using the CRA mileage rate, multiply an employee’s total business kilometres driven during a given tax year with the corresponding kilometric rate of ($0.70 per km 2024 for the first 5,000km and $0.64 thereafter). This amount should be included in Box 14 on their T4 slip from the employer to declare it as income when filing taxes every year unless the allowance meets certain criteria and is considered “reasonable.”

3 . Are car expenses covered under my prescribed mileage rates allowance?

Yes – once you met CRA’s conditions, reimbursed car expenses such as insurance costs and eligible lease payments are intended to be covered by your prescribed mileage rates allowance according to CRA guidelines.

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