Travel expenses for medical, moving and Northern residents deduction claims

The Canada Revenue Agency (CRA) seems to think it cost less to operate a vehicle in Canada in 2012 than in 2011.

On January 11, 2013, the CRA released the prescribed rates for the 2012 tax year for claiming Medical, Moving and Northern Residents Deduction Motor Vehicle Claims on your annual income tax return. The rates are down slightly from 2011 rates.

Deductible vehicle expenses include operating expenses such as fuel, oil, tires, licence fees, insurance, maintenance, and repairs as well as ownership expenses such as depreciation, provincial tax, and finance charges.

To claim motor vehicle expenses, you can choose one of two methods:
• the detailed method, which requires all receipts for the expenditures above, as well as travel logs (this method is a requirement for other claims on the return, such as deductible auto expenses for the self-employed or employed commissioned salespeople);
• the simplified method, by which you track the number of kilometres driven and claim a per-kilometre amount. Although far less onerous than the detailed method, the CRA still requires documentation of kilometres driven.

Medical expenses. You may claim motor vehicle expenses as medical expenses if you are required to travel more than 80 km. (40 km. one way) from your residence to receive medical treatment not available in your community. Receipts are not required but you must maintain a mileage log.

Moving expenses. You can also claim motor vehicle expenses as moving expenses if you move for the purposes of earning income from a new employer. Travel expenses under moving claims are deductible against income earned from the new employer but your new residence must be more than 40 km. from your former residence.

Northern residence deduction. If you resided in an area which is a prescribed “northern” or “intermediate” zone for a period of at least six consecutive months beginning or ending in a taxation year, you may be entitled to claim motor vehicle expenses under the Northern Residents Deduction under section 110.7(1) of the Income Tax Act.

The per-kilometre rates for 2012 income tax purposes are:

Alan Rowell is president of The Accounting Place which provides accounting and taxation services to individuals and small to medium-sized businesses. He holds a DFA, Tax Services Specialist designation from the Knowledge Bureau and he is a Knowledge Bureau Strategic Educational Partner.