CPM CRA Cents per kilometre

CRA sets new per kilometre rate for 2022

The Canada Revenue Agency (“CRA”) has updated their per kilometre recommended reimbursement rates for 2022. This year, the CRA automobile allowance rate is ¢61 per kilometre. 

¢61 is the recommended rate per kilometre for the first 5,000 kilometres driven; the recommendation is ¢55 per kilometre after that. 

An additional ¢4 per kilometre is recommended in the Northwest Territories, Yukon, and Nunavut.

The 2022 ¢2 increase is the first rate hike in two years, and the most significant since 2019, when it increased by ¢3 over 2018. 

The rates for 2021 were:

  • 59¢ per kilometre for the first 5,000 
  • 53¢ per kilometre driven post-5,000

The rates for 2020 were:

  • 59¢ per kilometre for the first 5,000
  • 53¢ per kilometre driven after that

In both 2021 and 2020, the ¢4 Northern bonus was the same. 

light blue world map

What do these rates mean for companies and drivers?

If you are a business owner in Canada, and you reimburse your drivers at the CRA mileage rate, you do not need to deduct anything from the repayment. Employers in Canada normally deduct CPP, EI, and income tax from paycheques. These contributions need not be deducted from reasonable reimbursements. 

The CRA acknowledges that many employees use their personal vehicle for business purposes. Just as a carpenter needs to bring a saw to work, so is a car a necessary business expense for many workers. The CRA therefore permits deduction-free reimbursements, as if these were top-line business expenses.

Drivers benefit from reimbursement programs because it simplifies their workload. Some workers—who are not paid reimbursements by their employer but who drive their own car for work—calculate their own vehicle expenses at tax time. This process is more laborious for employees than submitting reimbursable mileage to their employer.

Why ¢61?

To determine their rate recommendation, the CRA estimates how much it costs to drive a car one kilometre. While we do not have insight into their exact calculation, we can tell you how Cardata calculates mileage costs for their clients. Cardata looks at the following fixed and variable expenses when determining reimbursements:

  • Depreciation
  • Fuel prices 
  • Repair & maintenance costs
  • Insurance premiums
  • Taxes
  • License and Registration fees

The figure has increased more dramatically this year likely due to the rising costs of goods and services. 

Because all vehicles have different expenses in each of these categories, ¢61 is an average. This is disadvantageous for business owners and for drivers. As an average, the figure necessarily over- or under-reimburses most workers. 

Who uses cents per kilometre?

Cardata employs these recommendations for clients who reimburse using the cents per kilometre method. A cents per kilometre plan is ideal for companies whose drivers’ business travel is occasional. For other clients, whose sales teams are constantly on the road, more cost-effective solutions exist. 

Want to learn more about reimbursement solutions? Read about all the ways to reimburse employee-owned fleets here!

speedometer

Companies with employees on the road choose Cardata. We empower CFOs to reimburse mileage better. We offer outsourced administration, mobile mileage capture applications, and a full suite of reimbursement tools to simplify the administrative and financial burdens of vehicle operations.

We are the only vehicle reimbursement provider truly invested in supporting drivers, administrators, and executives. Cardata products and services are for all stakeholders.

Founded in 1999, Cardata was launched by former fleet executives who identified a need for a cost-effective and accurate way to reimburse drivers. Since our founding, we have built a 20-year track-record of delivering exceptional vehicle reimbursement solutions. Today, we serve companies ranging from smaller regional enterprises to Fortune 500.

Cardata Team
The team behind Cardata