Tip 72 - What's the advantage of using a personal vehicle for work?

If you meet certain conditions, you are eligible to receive a tax-free allowance for the use of your personal vehicle in the performance of employment duties. Eligibility allows your employer to pay you a reasonable per-kilometre reimbursement rate. The maximum rate is 41 cents for the first 5,000 kilometres, and 35 cents on the remainder, depending on the province or territory in which you are employed. To be tax free, the reimbursement must be based on the number kilometres driven for employment purposes. This is advantageous because:

$image\BULLET.gif$ there is a periodic reimbursement for the money you spend maintaining and operating your vehicle,

$image\BULLET.gif$ you do not have to keep your receipts after they are given to your employer; and

$image\BULLET.gif$ receiving a tax free allowance makes it easier to prepare your tax return.

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