# Vehicle Expenses and per rate per diems



## sn00ky (Feb 7, 2014)

Hello everyone,

I have been searching everywhere and it seems may answers come up.
I am employed, and utilizing my personal vehicle for work purpose. I get paid a flat rate every month, regardless of kilometers driven. i also get paid a per kilometer rate of 0.43/km when travelling outside of city limits. In addition, I receive a rate each day that I am away from the city (referred to as an "Infield Mileage Charge" on work purpose, if I am not charging my kilometer rate (this rate is a set $50/day as I stay away for weeks at a time).
My flat rate per month is taxed on my bi-monthly paycheck.
My kilometer rate is not taxed.
My Infield Mileage rate is not taxed.

My employer is currently changing the way this works, and has resubmitted my Infield Mileage Charge as part of my T4 - making it taxable. This is going back to 2010, 2011, 2012 tax years and the amendments have been sent to CRA.

Up until now, I have been reporting the amount shown on my T2200 on my Income Tax as "Other Income". The amount shown on the T2200 was a breakdown of my flat monthly rate, and also my kilometer rate and infield mileage combined.
I did not include the flat monthly rate in the "Other Income" since my T4 already reflected this number.
In reporting this money, I have been claiming my motor vehicle expenses.

So, my questions are...
Should I have been including the Infield Mileage money as Other Income?
Should I have been including the 0.43/km rate as Other Income?

What I really need to find is - am I supposed to report the 0.43/km rate allowance to CRA and be taxed on it because I want to claim my expenses? Or do I not have to report it because it is under the 55 / 48c/km reasonable rule? If I don't report it, do I still get to claim my expenses based on the flat monthly rate?


Sorry if it's confusing, but just really trying to get it right as there are a lot of people and colleagues in this situation and unfortunately most of our tax advisers can't give us a straight answer with any degree of certainty.

Thanks to everyone in advance!


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## KRIS_KROSS (Jan 28, 2014)

Flat rate allowances not based on mileage are taxable. Thus, it is correct for your employer to include the flat rate per month and the infield milage rate on your T4.

In past years, it sounds like you have already been claiming the infield mileage as other income. As your employer is amending your T4s for 2010, 2011, and 2012 to include the infield mileage amount on your T4 for those years, it will thus be double taxed once you are reassessed (as it will now be reported twice as income). I would complete T1DJ for 2010, 2011, and 2012 once you are reassessed for the amended T4s in order to deduct the infield mileage amounts from your other income for those years. 

Where the allowance is not a reasonable amount (reasonable amount = $0.54 / km for 2013 as per Reg. 7306, 2012 = $0.53, 2011/2010 = $0.52), the whole amount of the allowance is included under paragraph 6(1)(b) in computing the employee's income and, if the employee qualifies, an appropriate amount may be deducted under paragraph 8(1)(f), (h), (h.1) or (j). Thus, the $0.43/ km allowance is considered unreasonable, as it is too low, and should be reported as income. You should add this allowance into your income in your T1ADJs mentioned above, if you have not already done so.

Where an employee receives an allowance for travel expenses that must be included in income (your flat monthly rate and infield mileage rate, and now your unreasonable $0.43/km allowance), the employee may claim actual expenses under paragraph 8(1)(h) or (h.1) (and capital cost allowance and interest under paragraph 8(1)(j)) if the other requirements of paragraph 8(1)(h) or (h.1), and the requirement of subsection 8(10), are met. Thus, you should be allowed to claim your own expenses, as the flat monthly rate and infield mileage rate are taxable to you, and you are now including your unreasonable $0.43/km allowance into into. It sounds as if you have already claimed your own auto expenses, but if not, you should deduct your auto expenses for each year in your T1ADJs mentioned above.


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## Zeeshanbmerchant (Jan 4, 2014)

Boy your employer has put you in a terrible situation by refilling your T4s. 

Now you have to pay someone hundreds of dollars to go through all that, worse yet do it yourself.


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## domelight (Oct 12, 2012)

sn00ky said:


> Hello everyone,
> 
> I have been searching everywhere and it seems may answers come up.
> I am employed, and utilizing my personal vehicle for work purpose. I get paid a flat rate every month, regardless of kilometers driven. i also get paid a per kilometer rate of 0.43/km when travelling outside of city limits. In addition, I receive a rate each day that I am away from the city (referred to as an "Infield Mileage Charge" on work purpose, if I am not charging my kilometer rate (this rate is a set $50/day as I stay away for weeks at a time).
> ...


 Ok so to explain this in simple English.

1. It sounds like you have actually reported this correctly re: you said the monthly rate is included in your T4.
2. The T2200 reflects the mileage allowance on a per kilometer basis which is correct.
3. I pose the question if point 1 and 2 are correct then why would your employer amend your T4.
4. I suspect that your employeer did not include the flat monthly amount in your T4.
5. you need to find out why there are amending the T4. What did they do wrong ?? Until you find out what has changed and why ? the correct direction to fix it will not likely be entirely correct.
6. If this affects so many people one would think the employeers accountant would draft a small letter of direction to the employee's. 
7. Basically to sum it up The straight per kilometer allowance should not be on your T4. Everything else should be.
Take 100% of your total business vehicle cost's (in or out of town)and deduct the 43 cents per kilometer you are reimbursed. the difference if any is a tax deduction which will help offset the taxable portion of the vehicle allowance which should be already included in your T4.
8. Do not include anything in other income, simply deduct the net difference of vehicle expenses. This would increase line 150 of your tax return and could have negative affects. in other areas.


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## OhGreatGuru (May 24, 2009)

Chances are the employer was ordered to do it by CRA, and ordered to make it retroactive to 2010, because the employer had not properly included the Field Mileage Rate as a taxable allowance on the T4. 

OP will have some paperwork to go through to make sure CRA realizes he had already declared this as income. But other employees of the company may never have declared it, which is another reason why CRA wants to go back 3-4 years.

PS: I agree with Domelight's Point 6 - Employer (or his accountant) should have sent an explanation.


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