Mileage allowance;

L'allocation kilométrique est l'argent qu'une entreprise verse à un employé qui utilise sa voiture personnelle pour le travail. Vous ne payez pas d'impôt dessus si le montant reste raisonnable : calculé selon les kilomètres réellement parcourus pour le travail, au taux fixé chaque année par l'Agence du revenu du Canada (ARC).

Brief

Not taxable (no tax to pay) if it tracks the actual kilometers traveled for work
Au taux fixé par l'Agence du revenu du Canada (ARC), plus élevé sur les 5 000 premiers kilomètres de l'année
A fixed amount paid each month, excluding mileage, becomes taxable.
Requires a travel log, a simple notebook where business trips are recorded.

Why does this matter?

Let's take the example of a plumber who travels 300 km a month visiting clients. If his company reimburses him for these kilometers at the IRS rate, the money goes into his pocket tax-free, and the company deducts the expense (reducing its own tax liability). But the rule is strict: without a logbook tracking the kilometers, the IRS and the tax authorities can revoke this benefit and demand payment, even years later. The classic pitfall: the entrepreneur who owns their own company and pays themselves a fixed amount each month, without accounting for travel time. A simple logbook kept weekly protects the deduction and your peace of mind. Bankeo connects you with a verified accountant or CPA, experienced in working with entrepreneurs who own their own companies, free of charge.

Frequently asked questions

What exactly is a mileage allowance?

C'est un remboursement : votre entreprise vous paie pour les kilomètres faits avec votre voiture personnelle dans le cadre du travail. Chaque année, l'ARC (l'Agence du revenu du Canada) publie un taux par kilomètre jugé raisonnable, plus élevé sur les 5 000 premiers kilomètres. Tant que vous respectez ce taux et notez vos trajets, cet argent n'est pas imposable.

Is a fixed monthly allowance taxable?

Yes. A fixed monthly payment, regardless of actual mileage, becomes a taxable benefit: it is added to the employee's income on the T4 (federal payroll slip) and the Relevé 1 (its French equivalent). The employee can then deduct their actual car expenses using forms T2200 and TP-64.3, but this is more burdensome than a properly calculated allowance from the outset.

I have my own company, can I pay myself a mileage allowance?

Yes. Your company can reimburse your business travel expenses at the CAF (French family allowance fund) rate: deductible for the company, tax-free for you, provided you keep accurate mileage records. To set this up properly, Bankeo will connect you with a verified accountant or CPA (chartered accountant) experienced in working with entrepreneurs who run their own businesses, free of charge.