Automotive

Kilometer reimbursement rate for work

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  • Jan 23rd, 2011 9:36 pm
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Newbie
Jan 6, 2011
6 posts
Vancouver

Kilometer reimbursement rate for work

Heyo,

I'm looking at taking an offer from a company that will involve heavy driving. They will reimburse me at $0.45/km. CRA lists a 2010 reimbursement rate at $0.52/km. Since this is the CRA, and they can sometimes (often?) be in their own world, I am looking for real world thoughts on this rate. I live in Vancouver.

I am projecting that insurance for a car (which I do not currently own) will be $150/mo. I expect this rate to cover my gas, but am wondering how likely it will be to cover insurance on top of that. At this point I don't have any ballpark figures that I can give for how much driving there will be, other than 'a lot', so I know that I can't get specific answers.

I hope to be able to get away with a late 90's sedan that is big enough in the back seats/trunk to transport some stuff.

However, I am looking for general thoughts on this rate, and comparisons to other rates that some of you may get. Anything helps, since it's been a while since I've owned a car and am finding it difficult to consider what I need to consider ;)

Thanks
30 replies
Member
May 20, 2005
288 posts
8 upvotes
45 is about right for a real world rate in Toronto, so I would expect the same for Vancouver. You're on the right track in finding a 90s beater to drive. For something like that, you should be able to cover all your costs including maintenance and gas through mileage. Having a car for the weekends is an added plus.
[OP]
Newbie
Jan 6, 2011
6 posts
Vancouver
The_Professor wrote:
Jan 17th, 2011 4:51 pm
I get $0.52/km in Richmond Hill.

Is that enough to cover anything more than your gas? Insurance, maintenance?
Deal Addict
May 27, 2005
1269 posts
7 upvotes
depends on the company really and the CRA and how they work the numbers.

My company paid 0.42 per km in canada and 0.39 per mile in the USA for my colleagues.

0.45 sounds like it's pretty good if you do a lot of distance driving.

My company said that the reimbursement fee is to cover gas and wear and tear. I'm not to sure about insurance since it's your own vehicle. You will be using it outside of the the work hours.


It depends on the type of driving you'll be doing. if it's long distance driving, an older TDI golf would turn you a profit on the kms. I had a colleague here in toront that had a TDI golf and was laughing at how much $$$ he was making off the kms. He was avging 300-400 kms a day.

City driving I would recomend an older civic, like an 88-95 civic hb. reliable and fairly cheap to insure and repair. Hatch backs are great because of the extra space and they are lighter than sedans and easy access hatch to the trunk for tools and materials.

To profit from km reimbursement, you need to minimize repair, fuel consumption, initial cost, insurance and maximize usable space and long distance driving. You can make a good chunk of side money this way.
Deal Fanatic
User avatar
Aug 11, 2008
6899 posts
387 upvotes
Burlington
here in ontario you'd also have to amend your rating to business use.... which costs more than driving to and from work or just pleasure use.
critter767 wrote:
Jan 17th, 2011 3:44 pm
Heyo,

I'm looking at taking an offer from a company that will involve heavy driving. They will reimburse me at $0.45/km. CRA lists a 2010 reimbursement rate at $0.52/km. Since this is the CRA, and they can sometimes (often?) be in their own world, I am looking for real world thoughts on this rate. I live in Vancouver.

I am projecting that insurance for a car (which I do not currently own) will be $150/mo. I expect this rate to cover my gas, but am wondering how likely it will be to cover insurance on top of that. At this point I don't have any ballpark figures that I can give for how much driving there will be, other than 'a lot', so I know that I can't get specific answers.

I hope to be able to get away with a late 90's sedan that is big enough in the back seats/trunk to transport some stuff.

However, I am looking for general thoughts on this rate, and comparisons to other rates that some of you may get. Anything helps, since it's been a while since I've owned a car and am finding it difficult to consider what I need to consider ;)

Thanks
RIBO LICENCED INSURANCE BROKER(ontario) -OVER 30 YRS OF EXPERIENCE
YOUR BEST INSURANCE IS AN INSURANCE BROKER
All the information provided is for reference purposes only. The actual wordings, conditions and exclusions of your policy will apply.
Deal Expert
User avatar
May 10, 2005
24581 posts
2340 upvotes
Ottawa
Be aware that your insurance will be considerably higher because you are using the vehicle for work (as opposed to to and from work or for leisure purposes).
The Federal Government rates are here http://www.njc-cnm.gc.ca/directive/inde ... 1&lang=eng
Note that they are changing almost monthly based on the rapidly changing prices of gas. Also, these are rates to take your vehicle from a place of business to another place of business occasionally and does not account for this to occur daily for long term.
The wear and tear on your own vehicle for, as you say, "that will involve heavy driving" will be considerably more than just to and from work. Also, $150 per month (1800 per year) seems really low, in the city, even for ordinary insurance, let alone using it for work.
Lastly, your employer does not even account for your initial expense of buying the car. It is going to cost you a lot to begin this job. I hope you are going to break even eventually.
It’s not how far you fall that counts. It’s how high you bounce that counts! General G Patton
Deal Addict
Feb 26, 2008
1146 posts
285 upvotes
Every year CAA publishes an estimate of driving costs which can be found here: http://caa.ca/documents/CAA_Driving_Cos ... e_2010.pdf

It's a nice little publication because the authors are pretty explicit about their assumptions which enables people to make little adjustments to better reflect their actual situation. Your strategy of buying a 90's car and then driving the hell out of it makes good sense to me, as long as you find something that is reliable or you have access to some sort of back-up transportation. If you can get a Camry that's still in good shape, or even a beige Corolla, you'll probably make a few bucks on mileage.
Sr. Member
Apr 5, 2007
549 posts
32 upvotes
Whitby
critter767 wrote:
Jan 17th, 2011 5:00 pm
Is that enough to cover anything more than your gas? Insurance, maintenance?

What the hell would you be driving to spend $0.52/km in gas alone? A tank?

Even a truck @ 15 L/100km at today's gas prices would be $0.17/km..
Deal Addict
User avatar
Oct 5, 2003
3700 posts
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I like driving for work when I get a chance. I get $.50 per km and on my 500km trip last week I estimate that it cost me about $.15 per km in gas. Wear and tear, depreciation, maintenance etc. does not cost me $.35 per km so it's like making extra money every time I drive. I don't consider insurance since I would be paying for insurance even if my vehicle had no work use. All highway km so financially it works out good for me.
[OP]
Newbie
Jan 6, 2011
6 posts
Vancouver
Cool, thanks guys. All of this is helpful. I didn't consider that I would have to get a different kind of insurance.
Deal Addict
User avatar
Oct 12, 2007
3004 posts
142 upvotes
Ottawa
Keep in mind that we are responsible for getting yourself to your place of work - your employer is not supposed to subsidize that portion of your mileage - and your subsidy cannot cover personal travel. Some won't split hairs (particularly if there's not one really permanent place of work where you regularly report) but there can be tax implications if the stipend is overly generous.

At the end of the day, $0.45 is reasonable but a tad on the low side. Still, if you do 20k kms a year for business, drive a car that gets 9L/100kms and if you can get gas at $1.20/L you'll net about $5-6k for the year after fuel, oil changes, additional tire wear, etc. - that's before depreciation and insurance and assumes no catastrophic maintenance (such as a transmission or engine rebuild). If you drive a beater, depreciation won't be an issue. Where 45 cents gets stingy is if you drove a newer vehicle because you'd be chewing through the warranty period and the best years/kms of the car.

The rate (referred to in a post above) that is used by most federal government employees is adjusted a 4 fixed times a year (by agreement with the main bargaining agents) and tends to vary the most by fuel prices which are surveyed across the country. In an era of volatile gas prices, you want some protection against escalations - especially if the rate you're being given is already on the low side of the equation. If you can get an agreement to review the rate every six months, depending on insurance industry and gas price trends, that would be ideal.
Deal Guru
Feb 29, 2008
13077 posts
1034 upvotes
Montreal
I get paid 52c. It helps that I own my own company. :)
Deal Fanatic
Feb 21, 2006
5148 posts
97 upvotes
Justin wrote:
Jan 17th, 2011 6:59 pm
I like driving for work when I get a chance. I get $.50 per km and on my 500km trip last week I estimate that it cost me about $.15 per km in gas. Wear and tear, depreciation, maintenance etc. does not cost me $.35 per km so it's like making extra money every time I drive. I don't consider insurance since I would be paying for insurance even if my vehicle had no work use. All highway km so financially it works out good for me.

People underestimate easily. A good rough rule of thumb is that actual running costs per kn are about 2x the price of gas alone (wear & tear, maintenance, oil, tires, fluids, car wash, service intervals, accident damage repair, etc.), and total costs are about 4x the price of gas (including depreciation, insurance, licence plates, purchase and resale costs, garage/home parking space, auto-related tools and equipment etc.).
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