Meals, car expenses: Estimate your deduction and the corresponding tax savings.
$0.72/km (first 5,000 km), then $0.66/km.
Meals and entertainment, mileage-based car allowance, or car allowance based on percentage of business use.
Mileage, amount paid, or percentage of use, as well as your marginal tax rate.
Total deduction calculated and net tax savings in dollars.
Deductible business expenses allow a self-employed individual or a corporation to reduce their taxable income, and thus the amount of tax owed. For an expense to be deductible, it must be incurred for business purposes (to generate business income) and be reasonable. Certain expenses have specific rules: meals and entertainment at 50%, a vehicle based on the percentage of business use, and a home office on a pro-rata basis based on floor space.
If you use your vehicle for work, you have two options. The reasonable rate method applies $0.72/km for the first 5,000 business kilometers and $0.66/km thereafter (2026 rates). It’s simple and ideal for allowances paid by an employer. The percentage-of-use method deducts the business portion of actual expenses (gas, maintenance, insurance, CCA), which may be more advantageous for a newer or heavily used vehicle.
The 50% rule exists because meals and entertainment expenses include a personal component (you would have eaten even without the client). Tax authorities (CRA and Revenu Québec) apply this limit to prevent abuse. The same rule applies to ITCs/ITRs: only 50% of the GST and QST is recoverable on these expenses. One exception: long-haul truck drivers can deduct 80%.
| Type of fee | Rate or limit for 2026 |
|---|---|
| Mileage: First 5,000 km | $0.72/km |
| Extremely long, over 5,000 km | $0.66/km |
| North of the 60th Parallel Supplement | +$0.04/km |
| Dinner and performance | 50% tax-deductible |
| Meals for long-distance travel | 80% tax-deductible |
| Maximum DPA cost for passenger cars | $38,000 + tax |
| Maximum cost for zero-emission vehicles (Cat. 54) | $61,000 + tax |
| Maximum deductible monthly rent | $1,100/month + taxes |
| Maximum deductible interest (car loan) | $350/month |
Sources: CRA, Revenu Québec (2026 standard rates, identical at the federal and provincial levels).
In 2026, the standard mileage rate is $0.72/km for the first 5,000 business kilometers, and $0.66/km thereafter. North of the 60th parallel, an additional $0.04/km is added. These rates have been the same for both the federal government and Quebec since 2025.
You deduct the business-use portion from actual expenses: gas, maintenance, registration, insurance, interest, rent, and depreciation. The percentage is calculated using a logbook (business km / total km). Example: 8,000 business km out of 20,000 total km equals 40%. If expenses are $8,000, the deduction is $3,200.
In general, 50% of business-related meal and entertainment expenses are deductible for both income tax and CTI/RTI purposes. For long-haul truck drivers, the deduction increases to 80%. Membership fees for sports or golf clubs are not deductible.
Keep a logbook: date, starting and ending points, purpose of the trip, and distance traveled. Save receipts for gas, maintenance, and insurance. A mobile tracking app is highly recommended to automate the process.
Business meals are 50% tax-deductible. Entertainment expenses—including meals, event tickets, and modest business gifts—are also 50% tax-deductible. Membership fees for clubs (sports, social, golf) are generally not tax-deductible.
The tax savings equal the deduction multiplied by your marginal tax rate. In Quebec in 2026, a self-employed individual with $100,000 in income has a marginal tax rate of 36.12%: a $5,000 deduction therefore saves $1,806 in taxes.
The calculation is the same, but the tax savings differ because the tax rates are different. A self-employed individual deducts at their personal marginal tax rate (up to 53.31%). A corporation deducts at 12.2% (for SMEs under the DPE scheme) or 26.5% (for those above that threshold).
Bankeo connects Quebec entrepreneurs and self-employed professionals with CPA accountants who specialize in tax optimization and business deductions. The service is free. We understand your business and connect you with accountants who can maximize your deductions while complying with tax regulations.
Tax optimization for business vehicles.
Read the article →A Practical Guide for Quebec Entrepreneurs.
Read the article →Complete list and rules for 2026.
Read the article →Moving expenses are tax-deductible for business owners.
Read the article →Bankeo connects Quebec entrepreneurs with accountants who specialize in tax optimization and business deductions. Free service.
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