CRA Mileage Rate in Canada: How Much You Can Claim Per Km (2024 Guide)

In Canada, many individuals and businesses use their personal vehicles for work-related purposes. If you’re one of them, you might be wondering how much of that driving you can claim when filing your taxes. The CRA (Canada Revenue Agency) mileage rate allows you to deduct or be reimbursed for work-related kilometers driven. However, understanding the ins and outs of this process, the current rates, and how to maximize your claims can be a little complex. This article will provide a detailed guide to help you navigate the CRA mileage rates, ensuring you’re getting the most out of your vehicle expenses.

What Is the CRA Mileage Rate?

The CRA mileage rate (also referred to as the automobile allowance rate) is a set amount per kilometer that businesses and individuals can claim on their tax return when they drive their personal vehicle for work-related purposes. The CRA sets these rates annually, providing a fair and standardized way to reimburse employees or allow individuals to deduct vehicle-related expenses incurred during business activities.

The mileage rate covers various expenses related to vehicle use, such as:

• Fuel
• Maintenance and repairs
• Insurance
• Depreciation
• Vehicle registration fees

While these costs vary by region and individual circumstances, the CRA rate provides an average, simplified method to compensate for vehicle-related expenses.

Who Can Claim Mileage?

Claiming mileage on your taxes or as part of a business expense isn’t available to everyone. To qualify, you need to meet specific conditions laid out by the CRA. Below are the key groups who can claim mileage:

1. Self-Employed Individuals

Self-employed individuals who use their personal vehicles for business purposes can claim mileage as a business expense. This includes entrepreneurs, contractors, and anyone who is required to travel for their business activities.

2. Employees

Employees can also claim mileage, but there are certain restrictions:

• Your employer must require you to use your own vehicle for work-related tasks.
• You need to be receiving a reasonable allowance from your employer for vehicle expenses or provide proof of out-of-pocket expenses.
• Employees must obtain a T2200 form (Declaration of Conditions of Employment) from their employer to claim vehicle expenses.

3. Commission Employees

Employees who earn commissions can claim vehicle expenses related to earning that income. These claims are subject to special rules, and commission employees may also need a T2200 form to claim these deductions.

4. Volunteers

In certain cases, individuals volunteering for a registered charity or other non-profit organization may claim a deduction for vehicle expenses. This is typically subject to specific CRA guidelines and charitable allowances.

Read also: Tax Brackets Canada 2024: Understanding Income Tax Rates

How Much Can You Claim Per Kilometer in 2024?

For the year 2024, the CRA mileage rates are updated to reflect current market conditions, including fluctuating fuel prices, vehicle maintenance costs, and general inflation. The mileage rates are typically divided into two tiers:

• $0.68 per kilometer for the first 5,000 kilometers driven.
• $0.62 per kilometer for any kilometers over 5,000 driven.

These rates are designed to cover the broad spectrum of costs associated with operating a vehicle, and they are applicable whether you’re using your car for work as an employee, a business owner, or both.

Example Calculation

Let’s say you drove 8,000 kilometers for work in 2024. Here’s how you’d calculate your claim:

• For the first 5,000 kilometers: 5,000 km x $0.68 = $3,400
• For the remaining 3,000 kilometers: 3,000 km x $0.62 = $1,860

Total claimable mileage amount = $3,400 + $1,860 = $5,260

This method provides a simple way to account for the costs of operating a vehicle for work without the need for detailed calculations of fuel, repairs, and insurance separately.

Eligible Vehicle Expenses You Can Claim

In addition to the mileage rate, self-employed individuals and commission employees who choose to track their actual expenses instead of claiming the CRA mileage rate can deduct various vehicle-related costs. These expenses include:

1. Fuel Costs
   • Gasoline or diesel
   • Propane or electric charging (for electric vehicles)
2. Maintenance and Repairs
   • Regular servicing (oil changes, tire rotations, etc.)
   • Major repairs like engine work, brake replacements, etc.
3. Insurance Premiums
   • If you have vehicle insurance specific to business use.
4. Leasing Costs
   • If you lease your vehicle, you can deduct lease payments proportional to the percentage of time used for business.
5. Interest on Car Loans
   • You can deduct interest on your car loan if the vehicle is used for business.
6. Vehicle Depreciation (Capital Cost Allowance)
   • If you purchased the car, you can deduct depreciation over time based on CRA’s rules.

Remember, only the portion of expenses that relate to your business or work use is deductible. You must track both your personal and business mileage to determine what percentage of your vehicle use was for work.

How to Track Mileage for CRA

Properly tracking your mileage is crucial to support your claim with the CRA. If you fail to keep an accurate logbook or provide supporting documents, your claim may be disallowed. Here’s how you can keep a record:

1. Maintain a Logbook
   • The CRA recommends keeping a detailed logbook of each trip you take for work. The logbook should include:
     • Date of the trip
     • Starting and ending odometer readings
     • Total kilometers driven
     • Purpose of the trip (client visit, delivery, etc.)
     • Location details
2. Use Mileage Tracking Apps
   • Several apps are designed to automatically track your mileage using GPS, helping you log kilometers accurately. Some popular options include MileIQ, TripLog, and QuickBooks Self-Employed.
3. Track Receipts
   • Keep receipts for fuel, repairs, and insurance to substantiate your claim. Even if you’re claiming the CRA mileage rate, having these receipts can help in case of an audit.
4. Simplified Logbook Option
   • If you kept a detailed logbook for at least one year, you may qualify for a simplified logbook option. You can use a representative three-month period to estimate annual mileage.

Common Mistakes to Avoid When Claiming Mileage

The CRA is strict when it comes to vehicle expense claims, and any mistakes can lead to penalties or disallowed deductions. Here are some common mistakes to avoid:

1. Failing to Keep a Logbook
   • Not having a detailed logbook can lead to the CRA rejecting your claim. Ensure your logbook is up-to-date and includes all relevant information.
2. Claiming Personal Trips
   • You can only claim work-related mileage, not personal trips like commuting or running errands. Mixing personal and business mileage can lead to disqualification.
3. Overestimating Mileage
   • Don’t estimate the distance driven without evidence. The CRA can audit your records, and if there’s a discrepancy, your entire claim may be disallowed.
4. Not Obtaining a T2200 Form
   • Employees must have a T2200 form signed by their employer to claim vehicle expenses. Ensure this form is filled out properly.

Mileage Claims for Self-Employed vs. Employees

Self-Employed Individuals

Self-employed individuals have more flexibility in claiming vehicle expenses. You can choose between:

• Claiming the CRA mileage rate (for a simpler option), or
• Tracking and claiming your actual vehicle expenses.

In either case, you must determine the portion of your vehicle usage that was for business and calculate your claim accordingly.

Employees

Employees can claim vehicle expenses only if:

• Their employer requires them to use their personal vehicle for work.
• They are not fully reimbursed for vehicle costs.

Unlike self-employed individuals, employees are limited to claiming work-related mileage and cannot typically deduct other vehicle expenses, such as maintenance or fuel costs unless the employer provides a taxable allowance.

Mileage Rate Adjustments Over the Years

The CRA mileage rates are adjusted annually to reflect changes in vehicle operating costs. The rates have seen gradual increases over the past decade due to inflation, rising fuel prices, and the overall cost of vehicle ownership.

Historical CRA Mileage Rates

• 2023: $0.68 for the first 5,000 km, $0.62 after
• 2022: $0.61 for the first 5,000 km, $0.55 after
• 2021: $0.59 for the first 5,000 km, $0.53 after
• 2020: $0.59 for the first 5,000 km, $0.53 after

These adjustments ensure that taxpayers are fairly compensated for the evolving costs of maintaining and operating a vehicle in Canada.

FAQs: CRA Mileage Rate

Conclusion

The CRA mileage rate is a valuable tool for self-employed individuals, commission employees, and workers who use their personal vehicles for work purposes. By staying updated on the current rates, keeping an accurate logbook, and ensuring you meet all CRA guidelines, you can maximize your claim while avoiding any complications during tax season. If you’re unsure about the rules or need assistance, it’s always a good idea to consult with a tax professional to ensure you’re claiming everything you’re entitled to.