2024 CRA per-kilometer allowance rates

The Canada Revenue Agency (CRA) has adjusted the per-kilometer rates for vehicle allowances, varying by year and location. Here’s a breakdown of the recent revisions:

2024 Automobile Allowance Rates:

– $0.70 per kilometer for the initial 5,000 kilometers.

– $0.64 per kilometer beyond the first 5,000 kilometers.

– In the Northwest Territories, Yukon, and Nunavut, an additional 4 cents per kilometer is permitted for travel.

2023 Automobile Allowance Rates:

– $0.68 per kilometer for the first 5,000 kilometers.

– $0.62 per kilometer after the initial 5,000 kilometers.

– Additional allowance of 4 cents per kilometer for travel in the Northwest Territories, Yukon, and Nunavut.

2022 Automobile Allowance Rates:

– $0.61 per kilometer for the initial 5,000 kilometers.

– $0.55 per kilometer beyond the first 5,000 kilometers.

– An extra 4 cents per kilometer was allowed for travel in the Northwest Territories, Yukon, and Nunavut.

How to Manage Automobile Interest and Operating Costs?

Aside from capital or leasing expenses, vehicles entail additional costs that can be expensed within the company. These include fuel or electricity, insurance, repairs, maintenance, interest (subject to CRA limits), and license and registration fees. Such expenses are typically fully expensed in the corporation where the vehicle is owned or leased, with proper record-keeping required to support the claims.

How to Maintain Records?

To substantiate deductions, individuals or companies must maintain records of total kilometers driven and those driven for business purposes. This can be achieved through a logbook for each business-used vehicle, documenting the date, destination, purpose, and kilometers driven for each trip. Additionally, odometer readings at the fiscal period’s start and end, or upon vehicle changes, must be recorded. Employees and owners may be eligible for a simplified logbook method.

How to Utilize Technology?

Various apps are available to assist with logbook maintenance, such as MileIQ and MileBug, which can export data for accounting purposes. For automobile allowance recipients, maintaining a logbook is sufficient. However, companies or vehicle owners must retain all receipts and invoices for vehicle-related expenses, ensuring they detail the date, amount, expense type, and vendor name.

Questions?

If you want to discover more insights about How to Claim Motor Vehicle Expenses for Your Business in Canada, click here.

At Achen Henderson, we help entrepreneurs and business leaders build great companies. Do you have questions about how we can help you pay less tax in your corporation? Get in touch today!