We have created a list of important notes to consider regarding mileage logs, as well as some key tax aspects for your business and employees.
January 2025

Definition of a Business Trip According to the CRA and Revenu Québec

A business trip refers to travel undertaken to perform work-related tasks, such as:

  • Meeting with clients
  • Traveling to suppliers
  • Moving from one workplace to another
  • Attending professional conferences
  • Traveling to suppliers

Please note that travel from your home to your workplace is not considered a business trip.

Do Your Employees Use Their Vehicle for Work? Here’s What You Need to Know

Automobile Allowance Rates for 2025

The automobile allowance rates for 2025 are:

  • $0.72/km for the first 5,000 kilometers driven;
  • $0.66/km for each additional kilometer driven.
  • In the Northwest Territories, Yukon, and Nunavut, an additional $0.04/km applies.


Automobile Allowance Rates for 2024

The automobile allowance rates for 2024 were:

  • $0.70/km for the first 5,000 kilometers driven;
  • $0.64/km for each additional kilometer driven.
  • In the Northwest Territories, Yukon, and Nunavut, an additional $0.04/km applies.


Check out our article with a complete table of CRA and Revenu Québec rates for previous years.


Allowance Calculated Using an Unreasonable Per-Kilometer Rate

If you pay an employee an allowance based on a per-kilometer rate that is considered unreasonable (either too high or too low), the allowance is taxable and must be included in the employee’s income.

Example: 
An Employee Receiving an Allowance Not Based on the Prescribed Rate

You are a financial controller at a retirement home. Currently, employees receive an automobile and motor vehicle expense allowance of $0.35 per kilometer when they need to travel for work to assist residents with daily tasks.
This rate was negotiated in the last collective agreement, which is in effect for four years.
You know that the $0.35/km allowance is lower than the reasonable per-kilometer rates set out in Section 7306 of the Income Tax Regulations.


In this situation, the allowance is considered a taxable benefit because the per-kilometer rate is not reasonable (it is below the reasonable rate). Therefore, the allowance must be included in the employee’s income, and deductions for income tax, CPP contributions, and EI premiums must be withheld.

It is important to note that collective agreements do not override the Income Tax Act.

If the allowance is not sufficient to cover all expenses incurred by the employee, they may deduct eligible motor vehicle expenses. To claim this deduction, you, as the employer, must complete Form T2200, Declaration of Conditions of Employment. For more details, refer to Eligible Employment Expenses for Employees.

Payroll Deductions

If the allowance is taxable, it is also pensionable and insurable. Deduct CPP contributions, EI premiums, and income tax accordingly.

How to Report the Benefit

Report the taxable benefit in Box 14 ("Employment Income") and in the "Other Information" section under Code 40 at the bottom of the employee’s T4 slip.

For more information, see T4 - Information for Employers.




* Important Notice

TripLogik does not provide advice or opinions reserved for accountants or tax specialists.

All information contained in this document is taken from public and official documentation available on the websites of Revenu Québec and the Canada Revenue Agency (CRA). In the event of a dispute, discrepancy, or modification not reflected in this document, the official websites of these authorities take precedence.

It is the reader's responsibility to consult a qualified professional in the field.