CRA Mileage Rates 2024: Canadian GiG Workers, All You Need to Know, While Filing Your Tax!

Discover everything you need to know about CRA Mileage Rates for 2024. Learn about the current rates, how to calculate your mileage deductions, and essential tips for maximizing your tax benefits. Stay informed to ensure you’re fully compliant and optimizing your returns.

CRA Mileage Rates for 2024

The CRA mileage rate for 2024 is:

• 70 cents per kilometer for the first 5,000 kilometers driven for business purposes.
• 64 cents per kilometer for each additional kilometer beyond 5,000.

Important Points to Remember

• Business use only: The mileage rate applies to business-related travel, not personal use.
• Recordkeeping: While you don’t need detailed receipts, it’s essential to keep a log of your business-related trips for tax purposes.
• Alternative method: You can choose to track your actual vehicle expenses instead of using the mileage rate. However, this requires detailed recordkeeping.

Last Five-Year CRA Mileage Rates

Canada Revenue Agency (CRA) mileage rates from 2019 to 2024:

These rates include all vehicle-related expenses such as fuel, maintenance, insurance, and depreciation.

Alternative to Mileage Rate and Recordkeeping

Tracking Actual Vehicle Expenses

If you choose to track your actual vehicle expenses instead of using the mileage rate, you must maintain detailed records. This method can be more time-consuming but might result in a larger deduction if your expenses exceed the standard mileage rate.

To track your actual vehicle expenses, you’ll need to record:

• Fuel costs: Receipts for all fuel purchases.
• Vehicle lease or financing payments: Monthly payments or lease agreements.
• Vehicle insurance premiums: Proof of payment.
• Vehicle repairs and maintenance: Receipts for all repairs and maintenance work.
• Vehicle registration and license fees: Proof of payment.
• Depreciation: A portion of the vehicle’s value can be claimed as a depreciation expense.

Important: You must be able to allocate these expenses between personal and business use. This often requires keeping a log of your business trips, including dates, destinations, and odometer readings.

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Recordkeeping for Vehicle Expenses and Calculating Depreciation

Recordkeeping for Vehicle Expenses

To claim vehicle expenses, detailed recordkeeping is crucial. The CRA may request this information during a tax audit.

Essential records include:

• Trip logs: Documenting the date, starting and ending odometer readings, destination, and business purpose for each trip.
• Receipts: Maintain all receipts related to vehicle expenses (fuel, repairs, insurance, etc.).
• Vehicle logbook: A dedicated logbook can help organize your records.

Digital recordkeeping: Using apps or software can streamline the process and provide electronic backups.

Calculating Depreciation

Depreciation is a method of deducting the cost of a vehicle over its useful life.

Factors affecting depreciation:

• Vehicle cost: The original purchase price.
• Salvage value: The estimated value of the vehicle at the end of its useful life.
• Useful life: The expected lifespan of the vehicle.

Common depreciation methods:

• Straight-line method: Equal depreciation amounts each year.
• Declining balance method: Higher depreciation in earlier years, decreasing over time.

Note: Depreciation is a complex calculation. Using accounting software or consulting a tax professional can simplify the process.

Depreciation Methods and Expense Allocation

Depreciation Methods

There are several depreciation methods you can use when claiming vehicle expenses. Here are two common ones:

• Straight-line method: This method spreads the cost of the vehicle evenly over its useful life. For example, if a vehicle costs $30,000 and has a useful life of five years, the annual depreciation would be $6,000.
• Declining balance method: This method results in higher depreciation in the early years and lower depreciation in later years. The rate of depreciation is applied to the vehicle’s declining book value.

Choosing the right method depends on your specific circumstances and the type of vehicle.

Allocating Expenses Between Personal and Business Use

When using the actual expense method, you must allocate expenses between personal and business use.

Common methods for allocation:

• Logbook method: Based on the percentage of business kilometers driven compared to total kilometers.
• Split ownership: If the vehicle is jointly owned for personal and business use, expenses can be divided based on ownership.

Accurate recordkeeping is crucial for allocating expenses correctly.

Example of Expense Allocation and Depreciation

Expense Allocation

Let’s say you use your vehicle 70% for business and 30% for personal use. Your total vehicle expenses for the year are $10,000.

• Business-related expenses: $10,000 * 70% = $7,000
• Personal expenses: $10,000 * 30% = $3,000

Only the $7,000 of business-related expenses can be claimed as a tax deduction.

Depreciation Example

Assume you purchased a vehicle for $30,000 with an estimated salvage value of $5,000 and a useful life of five years.

Straight-line method:

• Annual depreciation: ($30,000 – $5,000) / 5 = $5,000

Declining balance method (using a 30% rate):

• Year 1: $30,000 * 30% = $9,000 depreciation
• Year 2: ($30,000 – $9,000) * 30% = $6,300 depreciation
• And so on…

Remember: The CRA has specific rules for calculating depreciation, and the method you choose can affect your tax savings.

CRA Mileage Rate for Medical Travel in 2023

Unfortunately, there isn’t a specific mileage rate designated for medical travel in 2023.

Instead, you can claim medical travel expenses as eligible medical expenses. This includes:

• Transportation costs: You can claim the cost of public transportation, taxi fares, or mileage if you used your own vehicle.
• Accommodation: If your medical treatment requires an overnight stay, you can claim reasonable accommodation costs.
• Meal expenses: You can claim a flat rate of $23 per meal, up to a maximum of $69 per day.

For vehicle expenses related to medical travel, you have two options:

1. Actual cost method: You can claim the actual cost of operating your vehicle, including gas, maintenance, insurance, and depreciation.
2. Mileage rate method: You can claim a flat rate of 64 cents per kilometer for the 2023 tax year.

It’s important to note that you must travel at least 40 kilometers one way to qualify for medical travel expenses.