2023 mileage rates in Canada

As the new tax year begins, it's crucial to familiarize yourself with the mileage rates and calculations applicable to your business-related driving in Canada. For the 2023 tax year, the Canada Revenue Agency (CRA) has established specific cents per kilometer rates:

1. For the provinces:
   • 68 cents per kilometer for the initial 5,000 kilometers driven.
   • 62 cents per kilometer for each additional kilometer beyond the initial 5,000 kilometers.
2. For the territories:
   • 72 cents per kilometer for the initial 5,000 kilometers driven.
   • 66 cents per kilometer for each additional kilometer beyond the initial 5,000 kilometers.

Calculation of reimbursement or deduction

To understand how the calculation works, consider the following example: Suppose you have traveled a total of 1,000 kilometers for business-related purposes during the tax year. For provinces, the reimbursement or deduction can be calculated as follows:

1. For the initial 5,000 kilometers driven, the rate is 68 cents per kilometer. Therefore, the reimbursement or deduction for the initial 5,000 kilometers would be $3,400 (5,000 km x $0.68).
2. For each additional kilometer beyond the initial 5,000 kilometers, the rate is 62 cents per kilometer. Since you have traveled 1,000 kilometers in total, there are no additional kilometers beyond the initial 5,000. Hence, there would be no reimbursement or deduction for additional kilometers.

The calculation rules for territories are the same as for provinces. Therefore, for the initial 5,000 kilometers driven, the rate is 72 cents per kilometer. Thus, the reimbursement or deduction for the initial 5,000 kilometers would be $3,600 (5,000 km x $0.72). For each additional kilometer beyond the initial 5,000 kilometers, the rate is 66 cents per kilometer. Since you have traveled 1,000 kilometers in total, there are no additional kilometers beyond the initial 5,000. Hence, there would be no reimbursement or deduction for additional kilometers. Therefore, your eligible reimbursement or deduction for the total of 1,000 kilometers in territories would also be $3,600 (5,000 km x $0.72).

Record-Keeping and documentation

Remember, maintaining accurate records and documentation is essential when claiming mileage reimbursement or deductions. This includes keeping track of your business-related mileage, documenting the purpose of each trip, and retaining receipts for any additional expenses such as parking fees or tolls.

By understanding the mileage rates and guidelines set by the CRA, you can effectively navigate the process of claiming mileage reimbursement or deductions in the 2023 tax year. Should you require further assistance or have specific questions related to your circumstances, consider consulting a tax professional or contacting the CRA directly for personalized guidance.