Tax Planning for You and Your Family 2019 by KPMG. p 196.

12.2.3 Allowances and advances for automobile expenses

If you receive a reasonable allowance for automobile expenses, the allowance will not be included in your income if it is based solely on the number of kilometres driven in the performance of your employment duties. If it is a flat

p 197

amount not calculated in terms of your employment-related driving, it will be taxable (though you may be able to claim offsetting automobile expenses—see 12.3.1). The CRA will agree to consider a flat periodic amount to be an accountable advance (rather than a taxable allowance) if you and your employer agree at the beginning of the year that you will receive a reasonable stated amount for each employment-related kilometre driven and you and your employer settle up at the end of the year regarding the difference between your actual business-related kilometres and the stated amount.


If you submit paperwork documenting your mileage, and you are paid according to the tax code then the money isn't taxable.

If your employer gives you money for auto expenses, and you don't have to submit paperwork to prove/document your expenses, then the money is taxable.

But if they give you $x per pay period or $y per month, then require you to refund extra money if your expenses are lower, or give you additional money if your actual expenses are higher then all the money for auto expenses is not taxable.

They treat the money paid out per check or per month to be an advance, so that you don't have to spend money from your pocket, but you must settle the difference at the end of the year. If that settlement doesn't occur, then the money will be taxable.

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