Simplified Travel Mileage Rates

by Anson
(Calgary, AB, Canada)

Simplified Travel Rates vs. Employee Auto Allowance Rates

Simplified Travel Rates vs. Employee Auto Allowance Rates

I am incorporated in Canada and am confused by the lack of information on the web for the simplified vehicle travel rates. I am glad I've found more information on this site.


However, I would like to clarify if there is any difference between the 2010 "Alberta rate of 51.5 cents per km" and the "52 cents for first 5,000 km and 46 cents for the remaining". Which one should I use?

Also, if I'm preparing T2 return for the year 2010-10-01 to 2011-09-30, should I use the 2010 or 2011 rates, if they were different?



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Hi Anson,

If you go back and read the section on simplified travel rates, you will notice it is used for medical travel, moving expense travel or if you are eligible for the northern residents deductions.

You don't use the simplified travel rate for business use of your personal vehicle. Therefore, you need to use the employee auto allowance rates which represents the tax exempt portion. Any amount paid over that amount is a taxable benefit.

When you are incorporated, you will notice that you have another option. You can find your two choices by clicking here.

Lastly, you reimburse the rate appropriate for the date travelled in the calendar year. It is not based on a fiscal year. For example if your mileage related to 2010, you should be reimbursed using 2010 rates. If your mileage related to 2011 business trips, you submit your expense report to be reimbursed using 2011 rates.




P.S. I would like to remind you there is a difference between information and advice. The general information provided in this post or on my site should not be construed as advice. You should not act or rely on this information without engaging professional advice specific to your situation prior to using this site content for any reason whatsoever.

Comments for Simplified Travel Mileage Rates

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Jan 04, 2012
 Allowance Mileage
by: Peggy

I'm a bit confused on mileage calculations.

My company is incorporated. I use my personal vehicle for company business and maintain a log book. My accountant said I do not need to keep gas,insurance, vehicle repair receipts etc. I seem to recall her saying there were 2 different ways to do this and since I keep a log, I don't need to keep vehicle related receipts. Does this make sense? Can you clarify this for me?



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Peggy,

It is my understanding that if you are being paid an auto allowance then all you need is your log to prove the amount of business miles driven. The allowance is based on business miles travelled therefore how much it costs you the employee to operate the vehicle is not relevant. The allowance is to cover your operating costs and wear and tear on the vehicle. That is why the log becomes so important in the event the business miles travelled was challenged in an audit.

The second option was discussed by following the link given in the first post above.

Sole proprietors, on the other hand, cannot be paid an allowance. They must use the detailed method and keep their receipts in addition to their log.
Jan 08, 2014
 Vehicle Allowance
by: Lou, BC

Hi,

I have a client who opened a business for only 5 months. S/he never put in any capital money but s/he did use their own car to do all the traveling.

Should I put the vehicle in as a capital asset and then do depreciation and insurance each month or claim mileage while preparing the tax return.

Personally, I think s/he'll get more money if s/he claims the mileage on income taxes, but s/he wants to keep the business taxes as low as possible. Thanks in advance for any help that is provided. Oh my client is in Alberta.
Jan 08, 2014
 Who can use auto allowances
by: Lake

Hi Lou,

Wow … serendipitous! I just created a new web page this week pulling all the options available for claiming business use of a personal vehicle.

You can find the chat here.

Take a gander through your options. Make sure you match the business structure / situation with the correct option.

Good luck.
Apr 04, 2014
 How to report automobile allowance in T2
by: Mike, ON

Hi, I am incorporated and I am the only employee of my company. I use my car which registered in my name for business. I decide to use auto allowance with per-kilometer rate to reimburse my vehicle expenses.

I understand the auto allowance is tax free for my individual tax return. Now my question is how to report the auto allowance in the corporate T2 return. For example, if my company gives me a $2,700 auto allowance, how is this $2,700 reported in the corporate T2 return?
Apr 05, 2014
 CCPC auto allowances
by: Lake

Mike,

I have a short chat on your options on how to reimburse your vehicle expenses if incorporated. Line 9281 of the T2 return is for vehicle expenses.

If you are a personal services business, the rules recently changed and allowable deductions are severely restricted. Just want to make sure you are aware of the changes.
Nov 07, 2016
 Business expense write offs
by: Nova Scotian, Canada

I have a Canada incorporated business registered in Nova Scotia. I'm going to work as contractor in Alberta for 2 months.

If I rent Hotel room for $2100 a month for total of $4200, will I be able to write off this expense 100% on my business expenses or taxes?"
Nov 07, 2016
 Living Out Allowances
by: Lake

Check out this chat for the rules for living out allowances:

https://www.bookkeeping-essentials.com/living-out-allowance.html

Click here to add your own comments

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