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Employee Vehicle Expenses

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Personal Tax
Filing Your Return
  ->  Employment Expenses  -> Employee Motor Vehicle Travel Expenses

Employee Motor Vehicle Travel Expenses

Income Tax Act s. 8(1)(h.1), s. 8(1)(j)

This is also discussed on the Business page under the topic Automobile (passenger vehicle) / motor vehicle expenses - Employees.

See also What expenses are included as motor vehicle expenses on the Business page, as well as the article on Trip logs.

Motor vehicle expenses may be deducted by an employee on Line 229 of their tax return if the employee:

bulletwas normally required to carry on the duties of employment away from the employer's place of business, or in different places, and
bulletwas required under the contract of employment to pay motor vehicle expenses incurred in the performance of the duties of employment, and
bulletdid not receive any allowance or reimbursement from the employer for motor vehicle expenses.  

Form T2200, Declaration of Conditions of Employment, must be completed by the employer in order for the employee to claim these expenses.

The employee claims the expenses on Form T777 Statement of Employment Expenses.

In order to deduct vehicle expenses on Form T777, the employee must track their vehicle expenses for the entire year, and must track their kilometres related to use of the vehicle for earning employment income, by use of a trip log.  Travel to and from the place of work is not considered use for employment.  When the form is completed, the kilometres used for earning employment income is entered, as well as the total kilometres driven in the year.

The motor vehicle expenses will include any GST/HST or provincial sales taxes incurred.  You may be eligible for a refund of the GST/HST included in the costs.  See Employee and Partner GST/HST rebate on the GST/HST page.

Line 229 employment expenses can be entered in the "other deductions" line of the Canadian Tax and RRSP Savings Calculator.

Canada Revenue Agency (CRA) Resources:

    - Line 229 Other Employment Expenses

    - T4044 Employment Expenses

    - IT-522R Vehicle, Travel and Sales Expenses of Employees (Archived)

Tax Tips:

A reasonable per-kilometre allowance is tax-free, and is the easiest method for an employee to recover vehicle expenses.

Employees deducting vehicle expenses on their tax return must track vehicle kilometres and vehicle expenses for the entire year.

Revised: November 01, 2017

 

 

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