WHAT IS THE CRA CENTS PER KM ALLOWANCE FOR 2021?

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The Canadian Revenue Agency (CRA) allows people to claim the use of their car for work as a tax deduction. The CRA reviewS the rates regularly but they remain unchanged since last year 2020.

The 2021 allowance rates are:

59 cents per km for the first 5,000km

Plus 53 cents per km from 5,001km and up

 

Special rates apply for Northwest Territories, Yukon, and Nunavut

63 cents per km for the first 5,000km

Plus 57 cents per km from 5,001km and up

 

The cents per km method is the simplest way to claim your work related car use from the CRA.

  • You must be required to use your vehicle as part of your work.
  • You CAN’T claim km for travel to and from your office or place of work, commuting doesn’t count.
  • You CAN’T ‘double dip’, if your employer is already compensating you for the use of your car your can’t also claim an allowance from the CRA
  • You DO need to keep records to prove that you used your vehicle for work for the number of km claimed.
  • You don’t need to keep all the individual fuel receipts, insurance receipts, car servicing receipts etc.
  • But, you CAN’T claim separate deductions for insurance premiums, depreciation and fuel etc.

 

If you want to maximise your tax deduction claim for vehicle use you may want to check out  the logbook method.

 

The logbook method allows you to claim a percentage of ALL your vehicle costs rather than just a basic per km rate. With a logbook you can claim fuel, insurance, servicing, depreciation and all other car related costs. The logbook method requires more record keeping BUT allows you to maximise your tax deductions for vehicle work use.

 

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