Form T2200 and T777: deducting vehicle expenses in Canada
When your employer reimburses below the CRA rate, you can deduct the gap with T2200 + T777. Here's how.
When you can claim
If you're a Canadian employee who uses a personal vehicle for work AND your employer either:
- Reimburses you below the CRA reasonable rate (72¢/66¢), or - Pays you no allowance at all (or only a flat allowance that ends up taxable),
you can deduct your vehicle expenses on Form T777 (Statement of Employment Expenses) attached to your T1 personal return.[^cra-t2200-85] To do this, you also need a signed Form T2200 (Declaration of Conditions of Employment) from your employer confirming you were required to use your own vehicle for work and weren't fully reimbursed.
Form T2200: what it certifies
T2200 is signed by your employer and confirms:
- You were required to work away from the employer's place of business. - You were required to use a personal vehicle for the work. - You were not fully reimbursed (or were paid a non-reasonable allowance). - The portion of expenses you paid (for fuel, repairs, insurance, lease/CCA).
No T2200 = no T777 deduction. Get it signed at year-end (December or January).
What you can deduct on T777
Prorated by business-use km / total km:
- Fuel and oil - Maintenance and repairs - Insurance - Licence and registration fees - Capital cost allowance (CCA), or lease costs - Interest on a vehicle loan (capped at $300/month for 2026)
If your employer pays a partial allowance, you reduce the deductible expenses by that amount (or include the allowance in income and deduct expenses fully — whichever is more beneficial).
Capital Cost Allowance (CCA) for vehicles
Vehicles fall into Class 10 or Class 10.1 depending on cost. For 2026, the cost ceiling for Class 10.1 (passenger vehicles) is $38,000 plus PST/GST. Anything above that ceiling is non-deductible. Class 10.1 has a maximum annual CCA of 30% on the declining balance, with the half-year rule in the year of acquisition.
Electric vehicles benefit from accelerated CCA (Class 54/55) — up to 100% in the first year for eligible zero-emission vehicles, subject to the same cost ceiling.
The logbook
CRA accepts a representative 3-month sample logbook after a 12-month base year, provided the pattern is consistent (within 10%). New drivers should keep a full-year logbook for the first year. Required fields:
- Date - Destination - Purpose of trip - Kilometres
Quilometragem's digital receipts include all four plus an integrity hash, satisfying CRA's contemporaneous-log standard.
Worked example
Alex drives 18,000 km in 2026; 12,000 are work-related (67% business use). Employer pays no allowance.
- Fuel: $3,200 × 67% = $2,144. - Insurance: $1,800 × 67% = $1,206. - Maintenance: $850 × 67% = $570. - Licence + registration: $130 × 67% = $87. - Lease cost (capped): $700/month × 12 × 67% = $5,628. - Total deduction: $9,635.
Alex attaches T777 + T2200 to the T1 return. At a marginal rate of 30%, the deduction reduces tax payable by approximately $2,890.
Quebec specifics
Quebec residents file an additional TP-64.3-V form to Revenu Québec (the equivalent of T2200) and use TP-59-V (Quebec equivalent of T777). Per-km figures and CCA limits align with the federal rules.
Bottom line
If you drive substantially for work and your employer doesn't fully reimburse you at the CRA reasonable rate, T2200 + T777 (and TP-64.3-V + TP-59-V in Quebec) can recover thousands per year. The key is the signed T2200 from the employer and a defensible logbook.