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I am currently doing my sister's taxes, as stated in a previous post. She started working at this new job in May and her previous work was done at one single office location, hence she is not eligible to claim any employment expenses. Since this is the case, she did not bother to write down the odometer reading on January 1, 2018, and because of my ignorance about how motor vehicle expenses, I did not tell her to write it down on January 1, 2019 either.

Her new job requires that she drive to different locations throughout the City of Toronto. Previously, her employer reimburses her for expenses at a per-kilometer basis (multiplied by a flat amount) and this reimbursed expense is not taxable according to the Income Tax Act. But, due to weird union negotiation failures, a new collective agreement signed in October 2018 caused the nontaxable reimbursements to end permanently. Any motor vehicle expenses are to be claimed on form T777 and the employer issued a T2200 to her.

So, form T777 requires that we enter the number of kilometers driven to earn employment income (that information she has), but also the total number of kilometers driven (which she does not have in 2018 and will not have in 2019 either). All other data (cost of fuel, motor vehicle registration fee, insurance premium) are available. What is a reasonable way for me to handle this situation without committing tax fraud or failing a review/audit by the CRA?

Also, I see something called the capital cost allowance, which is even more complicated. The car was more than 5 years old by the time employment expenses started to become an issue, and it is an inherited vehicle (title transferred from my deceased father to my sister). We know the purchase price of the car, $35 000, do we depreciate it by 30% for each year and use $35 000 X (1-30%)^5 = $5 882.45 as the baseline cost and go from there? Thank you so much.

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