Start a business, Do your taxes, Save money

How do I make my car allowance non-taxable?

Not so hard at all.

If my employer pays me say $500 every month (a “monthly allowance“) to use my own vehicle for work, it is considered a taxable benefit and I have to include that money in my income.


If my employer pays me a “reasonable per-kilometre rate” instead of a monthly allowance then it is not taxable and is not included in your income.

“Generally, an allowance is non-taxable when it is based solely on a reasonable per-kilometre rate.”

Be careful with this though. In the first case you are eligible to deduct certain auto expenses and in the second you are not.

Go here for more: Allowable Motor Vehicle Expenses for salaried employees

August 5, 2011 - Posted by | Random Questions | , , , , , , , ,


  1. So if you reimburse an employee at areasonable per-kilometer rate, does that get expensed under Motor Vehicle expenses for the company?

    Comment by Colin | November 11, 2012 | Reply

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