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Expense Process for Driving Mileage in Canada

Every country has its own rules and regulations when it comes to employee business expenses, to make sure amounts are properly documented and qualify as non-taxable expense reimbursements or allowances.  This includes any vehicle related expenses for business purposes.

Your employees in Canada may have to use their own vehicles for business related trips, and they will expect reimbursement for the driving mileage.  Like most countries, Canada has specific rates and methods to process mileage reimbursement to make sure they are not taxable.

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What is the Canada Revenue Agency (CRA)?

The CRA is the Canadian tax authority that sets the allowable business mileage rate each year.  The rate will typically increase each year to account for gasoline prices and other operating expenses for a vehicle.

What is the 2019 business mileage rate in Canada?

The mileage rates for 2019 are:

  • 58 cents per kilometer (first 5000 kilometers)
  • 52 cents per kilometer (after 5000 kilometers)

Client case: How to deduct business mileage with CRA

We had a client with employees in Canada that wanted to know the process for submitting driving mileage expenses.  We informed them about the current rate, and that the mileage reimbursement amount could be included in an expense report.

The only other requirement is that the mileage driven be business related, and the purpose of the trip should be documented to avoid any issues with the CRA.  The expense reimbursement would be tax free for business mileage.

Need more information about Canada?

If you are new to employing in Canada, you might have other questions about allowable employee business expenses such as:

For overnight business trips, do employees submit actual expenses for food and hotel, or is there a per diem rate?

What if driving mileage has a mixed personal/business purpose and how is the rate calculated?

Are expense reimbursements processed in payroll or paid separately to the employee?

These are the types of issues that we handle for our clients to make sure that they are in compliance with local employment, tax and immigration laws.  We make international employment simple.

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