Reimbursement for Business Use of a Personal Vehicle in Canada

Current reimbursement rates per kilometre

These rates apply from January 1, 2026. The Canada Revenue Agency generally considers them reasonable for an employer's per-kilometre allowance. They are not a universal requirement for every employer to pay this amount; confirm your reimbursement arrangement before travelling.

The 5,000 km threshold applies to business kilometres accumulated during the year. It does not restart for each trip or monthly claim. The territorial increase is $0.04/km for kilometres driven in a territory.

When is a mileage allowance tax-free?

A reasonable employee allowance can be non-taxable when it is calculated solely from kilometres driven for employment duties and the employee supplies detailed records. The employer must generally avoid reimbursing expenses for the same vehicle use on top of the allowance. There are specific exceptions for supplementary business insurance, tolls and ferry charges when they were not included in the allowance.

A flat monthly car allowance is generally taxable. Combining a flat amount and a per-kilometre allowance for the same vehicle use can make the whole combined allowance taxable. A rate above or below the published amounts needs to be assessed for reasonableness in the employee's circumstances; it is not simply a rule that only the excess is taxable.

Ordinary travel between home and a regular workplace is generally personal driving. Travel between work locations, or an eligible trip to a client or other point of call, may count as business driving.

Example: a claim that crosses 5,000 km

Suppose you have already driven 4,800 business km in a province in 2026. Your next eligible claim is 400 km, and your employer uses the CRA rates:

• The first 200 km bring the annual total to 5,000 km: 200 × $0.73 = $146.
• The remaining 200 km use the lower rate: 200 × $0.67 = $134.
• Total allowance for this claim: $280.

For 6,000 eligible kilometres driven entirely in a province during 2026, the annual calculation is 5,000 × $0.73 + 1,000 × $0.67 = $4,320.

What should a mileage log contain?

Record each work trip's date, destination, business purpose and kilometres driven. Keep an annual running total and provide the records with your employer's expense claims. Identify the vehicle and separate business travel from commuting and other personal trips. Keep receipts when claiming actual expenses or separately reimbursed charges.

If you are self-employed, these employee allowance rates are not a general flat-rate deduction for your own driving. You normally calculate the business share of eligible vehicle expenses, supported by receipts and a log of total and business kilometres. Record the odometer at the start and end of the fiscal period and keep separate records for each vehicle.

Previous CRA mileage rates

For each of these years, add $0.04/km for driving in Yukon, the Northwest Territories or Nunavut. Use the rates for the year of travel. These employee allowance rates are separate from public-service travel schedules and the CRA's simplified rates for certain personal tax deductions.

Track business kilometres with Motolog

Motolog helps you record trips automatically, separate business and personal driving, and prepare mileage reports. Official rates are available where supported, and you can also set custom rates. Review your trip purposes, annual distance totals and employer's policy before submitting a claim.

Explore automatic mileage tracking with Motolog, or compare the options on our pricing page.