Help claiming reimbursement vs auto expenses on the T777

Why is Profile giving a warning on the T777 - employee received $13700 for reimbursement of Auto expenses, but Auto expenses and Depreciation of auto and interest come to $17000.  Shouldn't we be able to claim the difference ($3300) as an expense?


Auto allowances are treated in a number of ways by CRA.

If the employee received a flat rate allowance not dependent on kilometers then the income should be included in box 14 on the T4 and the employee, with a valid T2200, would be able to deduct auto expenses. 

A reasonable per KM allowance is supposed to be EXCLUDED from income and therefore you may NOT offset it with auto expenses on the T777. FYI - The automobile allowance rates for 2013 and 2014 are:

  • 54¢ per kilometre for the first 5,000 kilometres driven; and
  • 48¢ per kilometre driven after that.

If there is a question of fact surrounding the reasonableness of the allowance this would result in a discussion with the employee and an amendment needed to the T4 to include the allowance in income. 

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