Mileage Reimbursement Allowance in Canada CRA (2022)

Here are the reasonable per-kilometre rates for 2022:

  • $0.61 per km on the first 5,000 km driven
  • $0.55 for every km driven beyond that

If you live in Nunavut, Northwest Territories or Yukon, it’s an extra $0.04 for each km driven.

What is Automobile Allowance?

When you use your own vehicle on an official assignment for work, you could receive a reimbursement for the mileage driven.

This allowance is paid by the employer. 

If this allowance is considered ‘reasonable’ by the CRA, then CPP payments, income taxes and EI premiums shouldn’t be deducted from this allowance, and the allowance should be made as an added payment on top of the employee’s salary.

The allowance also wouldn’t be considered a taxable benefit.

The amount of the ‘reasonable’ allowance is meant to provide a general benchmark for employers to follow when deciding on a per km amount to pay their employees.

Criteria for Claiming Automobile Allowance

The reasonable per-kilometre automobile allowance rate indicated above should only serve as a guideline – the true reasonable rate will depend on other factors, such as the kind of car driven and the driving conditions.

In general, an allowance is considered reasonable if it meets all the following criteria:

  • It is solely based on the kilometres driven for business purposes in a year
  • The per-km rate is reasonable
  • The employer did not previously reimburse the employee for costs related to the same use of the vehicle (with a few exceptions)

Let’s say, for example, that Natasha works as a sales rep for a food and beverage company, and uses her own vehicle to visit stores as part of her employment duties.

Her employer pays her the reasonable per-kilometre automobile allowance rate for only the kilometres she drives doing official company business.

In this case, the allowance would not be considered taxable and shouldn’t be a part of her income.

However, using the same example, let’s say Natasha was receiving $0.75 for every km driven.

In that case, the per km rate would be considered unreasonable since it’s much higher than the reasonable per kilometre allowance rate.

It would not meet the criteria for a reasonable allowance.

Businesswoman with car keys

Historical Mileage Rates in Canada

A reasonable per-kilometre amount is set by the Canada Revenue Agency (CRA) – you can find it in the Income Tax Regulations, in section 7306.

You can find the historical reasonable per-kilometre allowance rates for the past 7 years in the table below.

Year First 5,000 KM Each Additional KM
2021 $0.61 $0.55
2021 $0.59 $0.53
2020 $0.59 $0.53
2019 $0.58 $0.52
2018 $0.55 $0.49
2017 $0.54 $0.48
2016 $0.54 $0.48
2015 $0.55 $0.49

Source: Canada.ca

Did You Know?

If you live in Nunavut, Northwest Territories or Yukon, the reasonable per-kilometre allowance is an extra 4¢ from the rest of the country for each km driven.

Frequently Asked Questions

  • What is the kilometre rate for 2022?
  • How do you calculate the price per km?

Tara Al-Khudairi is a freelance personal finance writer who has worked in the financial services industry since 2017. She graduated from McMaster University with a degree in Finance and is pursuing her CFA.

She has worked at a major Canadian financial institution in various client-facing advisory roles, starting as a bank teller and working up to a Client Services Associate within the Asset Management division. She specializes in simplifying concepts of personal finance for people of various financial backgrounds.

When she’s not examining the markets looking for the next SHOP.TO, she’s either practicing yoga, planning her next vacation, or has her nose buried deep in a book.