Tax-Free Motor Vehicle Allowances

Income tax act s. 6(1)(b)(vii.1), Income Tax Regulations s. 7306

The Income Tax Act sets out the following amounts that may be paid tax-free to employees or officers as reimbursement for motor vehicle expenses incurred while travelling for business purposes, using their personal vehicle:

Rates per km 2012 2008-2011 2007/2006 2005 2004/2003
All provinces
-first 5,000 km $0.53 $0.52 $0.50 $0.45 $0.42
-over 5,000 km $0.47 $0.46 $0.44 $0.39 $0.36
Yukon/Northwest Territories, and Nunavut
-first 5,000 km $0.57 $0.56 $0.54 $0.49 $0.46
-over 5,000 km $0.51 $0.50 $0.48 $0.43 $0.40

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